DOING BUSINESS IN KAZAKHSTAN IN 2021
Since 2003, Healy Consultants Group PLC has been efficiently and effectively assisting our Clients with i) Kazakhstan business registration ii) business licensing iii) Kazakhstan business banking solutions iv) visa options and staff recruitment strategies and v) workspace rental solutions.
|Compare different Kazakhstan entities||LLP||Fast Business Solution||SEZ LLC||JSC||Branch office||Representative office|
|Also known as||TOO||TOO||Особые экономические зоны||Акционерное предприятие||филиал||Представительство|
|Best use of company?||All products and services||Close client deal now||Manuf/ export trading||To get pub. funding||Specific projects||Marketing & research|
|How soon to invoice Clients?||1 month||2 weeks||2 months||3 months||2 months||2 months|
|How soon can you hire staff?||1 month||2 weeks||2 months||3 months||2 months||2 months|
|How soon can you sign lease agreement?||1 month||2 weeks||2 months||3 months||2 months||2 months|
|How long to supply corporate bank a/c?||2 months||3 weeks||3 months||4 months||3 months||3 months|
|How long to supply co. reg / tax numbers?||1 month||2 weeks||2 months||3 months||2 months||2 months|
|Corporate tax rate on annual net profits (%)?||20%||20%||0%||20%||15%||0%|
|Limited liability entity?||Yes||Yes||Yes||Yes||No||No|
|Government grants available?||Yes||Yes||Yes||Yes||Yes||No|
|Govt approval required for foreign owners?||No||No||No||No||No||No|
|Res. director/partner/ legal rep. required?||Yes||Yes||Yes||Yes||Yes||Yes|
|Minimum paid up share capital?||US$1||US$1||US$1||US$330,000||none||none|
|Corporate bank account location?||Halyk Bank||ATF Bank JSC||Shinhan Bank||Eurasian Bank JSC||Bank Center Credit||Citibank|
|Can secure trade finance?||Yes||Yes||Yes||Yes||Yes||No|
|VAT payable on sales to local customers?||12%||12%||0%||12%||12%||None|
|Average total business set up costs?||US$13,220||US$37,070||US$15,200||US$14,550||US$14,700||US$13,550|
|Average total engagement period?||2 months||3 weeks||3 months||4 months||3 months||3 months|
Kazakhstan business setup summary
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Advantages and disadvantages
Advantages of Kazakhstan company registration
- Kazakhstan has seen consistently high growth over the past decade, with annual growth rates between 7 – 13% every year from 2001 – 2007 and 2010 – 2012, with growth continuing at more than 5% since. Though growth contracted during the global downturn in 2008, Kazakhstan never entered recession and the economy recovered swiftly;
- Kazakhstan has made efforts to improve the quality of Kazakh investment procedures and incentives to help aid the growing manufacturing and resource-processing industries. Demand is also high for foreign expertise to help manage the rapidly expanding banking and space exploration industries;
- Compared to countries in the western world, the cost of living and doing business in Kazakhstan is very cheap, including food, transport, utilities, rent, wages etc. Specifically, office rental and utility costs tend to be a fraction of what they are in most western cities;
- While Kazakhstan is landlocked, it is very close to two major markets – China and Russia. Kazakhstan has established strong trade relationships with both of these countries and owes much of its economic success to wealth gained from trading oil with high-demand markets like these. Kazakhstan has also established successful trade with Italy, Netherlands and France;
- Kazakhstan has seen a large inflow of foreign direct investment since the 1990s, with FDI increasing sharply in 2007 and increasing from that elevated level into the present year. Mining and quarrying remain the largest industry for FDI, while the finance industry has become the second largest industry for FDI, thanks to a 600% increase in investment in 2012;
- Kazakhstan has several Special Economic Zones in i) industrial; ii) services; and iii) technological sectors that provide the investors with numerous benefits for conducting business in the country. These benefits include i) 0% corporate taxation; ii) exemption from custom duties; and iii) straightforward process to hire foreign workers among many other benefits.
Disadvantages of Kazakhstan company registration
- Kazakhstan has a corporate tax rate of 20% for foreign and domestic companies. A lesser rate of 5 – 20% applies to income derived by sources in Kazakhstan by a nonresident without the use of a permanent establishment. However, this same group is taxed a 15% withholding rate on dividends paid, with this rate increasing to 20% if the payee is registered in a ‘tax haven’;
- English is spoken by only a small minority of Kazakhs, with Kazakh and Russian being the official and most common languages. Official incorporation documents must be translated in to one of these languages to be accepted;
- Kazakhstan’s court system is still underdeveloped, with courts lacking the ability to adequately protect property rights. Intellectual property rights are also ignored throughout the country;
- Kazakhstan suffers from high corruption, which can act as a barrier to completing many standard business practices. Kazakhstan is ranked 124th out of 180 jurisdictions in the 2018 Corruption Perceptions Index by Transparency International. Entrepreneurs should expect under-the-table bribes in order to expedite business operations;
- Exporting goods in Kazakhstan often requires stiff bribes to be paid to border guards and custom officers on a regular basis. While the tariff rate is just 3.4%, the lack of transparent import standards and licensing requirements can make trading a burden;
- While Kazakhstan is fully capable of protecting investors, the infrastructure in place to accept investments is poor, with convoluted legal codes and inconsistent application of regulations creating difficulties in the investment process;
- Kazakhstan’s trading relations with non-EEU (Eurasian Economic Union) nations is still restrictive due to the presence of numerous regulatory and procedural barriers. As a result, the Kazakh importers suffer to some extent whilst conducting trade with the non-EEU nations due to i) lack of economic integration with non-EEU nations; ii) indistinct documentation requirements; and iii) absence in the execution of a common customs code.
Best uses for a Kazakhstan company
Mining, natural resources and auxiliary businesses
Kazakhstan has a wealth of natural resources. Kazakhstan is the 18th largest oil producer, has the 2nd largest deposits of uranium in the world, and has the largest nickel, zinc, and silver deposits in West Asia. The mining industry represents nearly one third of Kazakhstan’s exports and the burgeoning industry is completely open to foreign investment, with many of the major investments in the industry being joint ventures with foreign businesses. There are therefore large opportunities for companies engaged in exploiting these resources, or supplying materials to those who do.
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Useful links for Kazakhstan
Government and public authority websites:
- Invest in Kazakhstan
- Kazakhstan Central Bank
- Kazakhstan Stock Exchange
- Kazakhstan airports
- Visiting Kazakhstan
- Doing Business 2020
- PWC; Doing Business Guide Kazakhstan
- Doing Business in Kazakhstan; Tax and Legal Issues
Latest information as of 2021