Merchandise Trade

• Kazakhstan was officially accepted as the 162nd member of the WTO on November 30, 2015.


• Since January 11, 2016, taxpayers have been liable for this issuance of electronic invoices (e-invoicing) on certain goods listed by the government, which was the measure specifically taken by the government following Kazakhstan's accession to the WTO, as well as the lowering of customs duties on approximately 1,500 products. E-invoicing has been obligatory for large taxpayers from January 2018 and will be obligatory for all categories of taxpayers from 2019.


• The Customs Union, which became the Eurasian Economic Union (EAEU) as of January 1, 2015, came into existence in 2010 and consisting of Kazakhstan, Russia and Belarus. Customs borders between the three countries were removed on July 1, 2011. Since then, a free trade zone has come into operation and the three countries have adopted unified import and export duties against trade with other countries, although exceptions remain for certain sectors, such as pharmaceuticals, plastics and transport equipment. Armenia joined the union on January 2, 2015, and Kyrgyzstan officially became the fifth member on August 12, 2015.


• Kazakhstan does not import much from other EAEU member states, except Russia, with which Kazakhstan already had tariff-free trade prior to the EAEU as it had been in a customs union with Russia and Belarus since 2010. In 2016, Kazakhstan's major importing partners were Russia (39.1% of total product imports), China (15.99% of total product imports), Germany (5.06% of total product imports), the United States (4.27% of total product imports) and Italy (3.2% of total products imports).


• The new Kazakhstan Customs Code and the Customs Code of the EAEU implemented a number of progressive provisions intended for the simplification of customs procedures, the integration of IT initiatives and the reduction of 'red tape' issues in customs control procedures from January 2018.


• In April 2018, full-scale electronic declaration was launched for all customs procedures through Information System 'Astana-1'. The Customs Code of the EAEU conceptually changed the definition of a 'customs declarant', which may significantly impact the business models of supply chains and logistics. The new provisions allow an entity that is qualified as an 'authorised economic operator' to apply simplified customs procedures.


• All labelling must be in both Russian and Kazakh. Goods from the customs union countries are generally exempt from Kazakhstan customs duties. Customs duties apply to goods imported to the customs union countries from third countries. Customs duty rates are established either based on a percentage (generally ranging between 0% and 30%; higher rates exist for certain goods) of the customs value of goods or in absolute terms in euros or USD.


• In addition to membership in the customs union, Kazakhstan has concluded a number of bilateral and multilateral Free Trade Agreements (FTAs) with the Commonwealth of Independent States (CIS), which provide for the exemption of goods circulated between the CIS member states from customs duties, provided certain conditions are met.


• The ATA Carnet temporary import system has been launched in Kazakhstan. This system allows the duty-free temporary import and export of goods for specific purposes.


• There are various anti-dumping measures imposed on products from Ukraine, autos parts and steel products from China and other countries, and light passenger vehicles from Italy and Germany.


• A customs processing fee is assessed at KZT25,000 for the main page of a customs declaration and KZT11,000 for each supplemental page.

Sources: WTO – Trade Policy Review, Fitch Solutions

Multinational Trade Agreements

Active

1. EAEU: The Customs Union (which became the EAEU as of January 1, 2015) consisting of Kazakhstan, Russia and Belarus came into existence in 2010, and customs borders among the three countries were removed on July 1, 2011. Via EAEU membership, the country has been able to increase its levels of trade openness by entering into FTAs with partners it would not ordinarily have. For example, Vietnam's FTA with the EAEU came into effect from October 2016, and in April 2017 it was announced that the EAEU and India had signed an FTA in order to stimulate trade between the Single Market bloc and India.


2. Uzbekistan, Kyrgyzstan, Russia and Georgia FTAs: Kazakhstan officially entered into a customs union with Russia and Belarus on July 1, 2010. Since then, Kazakhstan's trade policy has been heavily influenced by regulations promulgated by the customs union and its governing body the Eurasian Economic Commission, a supra-national body located in Moscow.


3. CIS: Kazakhstan is part of the CIS, a political and economic confederation of nine member states and two associate members. All of these are former Soviet Republics located in Eurasia (primarily in Central to North Asia), formed following the dissolution of the Soviet Union. Georgia withdrew its membership in 2008 and the Baltic States (Estonia, Latvia and Lithuania) chose not to participate.


4. Common Economic Zone (CEZ): The CEZ for goods came into force on May 20, 2004 and incorporates Belarus, Kazakhstan, Russia and Ukraine.


5. Ukraine-Kazakhstan FTA: An FTA between Ukraine and Kazakhstan came into force on October 19, 1998.

Sources: WTO Regional Trade Agreements database, Fitch Solutions

Foreign Direct Investment

• Value Added Tax: 12%
• Corporate Income Tax: 20%

Sources: Kazakhstan's Ministry of Finance, Fitch Solutions

Important Updates to Taxation Information

• A new tax code has been introduced from January 2018. Tax payers in Kazakhstan have also been afforded more protection in terms of legal mechanisms should they be involved in a dispute with the Kazakh tax revenue authority. The principle of 'good faith' is now enshrined in the tax code, which effectively means that the burden of proving tax violations is imposed on the tax authorities, as opposed to the tax payers themselves.
• The new tax regime imposes a considerable burden on businesses engaged in extractive industries, ensuring that, other than state-owned enterprises, only large multinational companies can achieve the economies of scale to take part. Businesses engaged in the exploration and extraction of mineral resources – including additional excess profits, taxed at rates of between 0-60%, rent tax on the export of crude oil at varying rates (depending on production levels and oil prices) and mineral extraction tax which ranges from 5-18% on the value of extracted crude oil and gas condensate (between 0-22% for minerals and coal and at 10% on the value of natural gas).
   
• The tax regime has become more conducive to business operations owing to the introduction of online filing for all major taxes, which has greatly reduced the time-consuming process of tax administration. Therefore, only around seven different types of annual tax payments need to be made in Kazakhstan which, consequently, takes around 182 hours to pay. This is the shortest time frame out of all eight Caucasus and Central Asian state and falls well below global norms for annual tax compliance time burdens.

Business Taxes

Sources: Kazakhstan's Ministry of Finance, Fitch Solutions
Date last reviewed: February 12, 2020

Localisation Requirements

Each year the Kazakh government sets different quotas for the hiring of foreign workers or how many local workers must be hired within different sectors. Sectors like mining and oil and gas have their own local workforce hiring requirements as provided for in the codes governing these industries. Automotives and agriculture have also been targeted.

Obtaining Foreign Worker Permits for Skilled Workers

As of January 1, 2017, the Kazakh government has adopted rules that make it more difficult for foreign workers to obtain a permit to work in the country. Overall, the process is time consuming and expensive. On average, a work permit takes around two and a half months to be issued. There are several critical changes to the previous regime. Under these new rules, heads of foreign branches and representative offices in Kazakhstan and heads of companies engaged in government contracts are now required to apply for work permits (they used to be exempt). Heavy fines now apply if work permits are not obtained. However, employers will no longer have to show proof that they have conducted market research on whether there is a local Kazakh citizen who can be employed for the role before applying for a foreign worker permit. Ratio requirements for local citizen hires or caps on foreign worker hires do not apply to branches of international businesses that employ 30 people or fewer. Fourth, a state fee will now have to be paid for every general work visa issued, whereas before it was free.

Visa/Travel Restrictions

Residents of several countries can travel to Kazakhstan visa-free. From January 2017, this has extended to include residents of the European Union (EU), the United States, and Japan.

Regional Workers

Significant migration from the country has taken place, which has the potential to increase further since Kazakhstan became a fully-fledged member of the EAEU in 2015. The country is a member, along with Russia, Belarus, Kazakhstan and Armenia. The EAEU single market provides for the free movement of goods, people, capital and services between member states, with a common external tariff regime. This has significantly increased the ease with which Kazakh citizens can be employed in other EAEU member states. EAEU ascension has also significantly widened the pool of potential labour for positions in Kazakhstan. The freedom of labour tenet in the EAEU regional agreement provides the country with access to the common labour market. All workers have equal rights in other EAEU member states, with no quota requirements needing to be met. The qualifications of Kazakh workers in various professional fields are automatically recognised. Workers involved in legal, educational, medical and pharmaceutical activities will still have to undergo a recognition procedure of their various qualifications in other EAEU member states. We note that the process of employing foreign citizens from non-EAEU or CIS countries remains complicated in Kazakhstan as the government implements fairly strict quota systems for foreign hires and strict local hiring content requirements in key industries, such as mining, and oil and gas.

Sources: Government websites, Fitch Solutions

Sovereign Credit Ratings

Sources: Moody's, Standard & Poor's, Fitch Ratings

Competitiveness and Efficiency Indicators

Sources: World Bank, IMD, Transparency International

Fitch Solutions Risk Indices

Source: Fitch Solutions
Date last reviewed: February 12, 2020

Hong Kong’s Trade with Kazakhstan

Export Commodity	Commodity Detail	Value (US$ million)
Commodity 1	Telecommunications and sound recording and reproducing apparatus and equipment	150.9
Commodity 2	Office machines and automatic data processing machines	21.9
Commodity 3	Electrical machinery, apparatus and appliances; and electrical parts thereof	5.6
Commodity 4	Photographic apparatus, equipment and supplies and optical goods; watches and clocks	2.3
Commodity 5	Professional, scientific and controlling instruments and apparatus	2.1

Import Commodity	Commodity Detail	Value (US$ thousand)
Commodity 1	Telecommunications and sound recording and reproducing apparatus and equipment	507.5
Commodity 2	Office machines and automatic data processing machines	290.6
Commodity 3	Power generating machinery and equipment	111.5
Commodity 4	Crude animal and vegetable materials	66.8
Commodity 5	Machinery specialised for particular industries	40.8