KAZAKHSTAN Law and Practice Contributed by: Timur Odilov, Mikhail Abdulov, Olzhas Abubakirov and Alnur Dauylbay, Haller Lomax LLP
• Rental fees: Paid as a licence obligation under exploration and mining licences. The amounts are as follows: for an exploration licence, from 15 to 100 MCIs (approximately USD122 to USD816) for one block, depending on the year of exploration; for a mining licence, 450 MCIs (approximately USD3,672) per square kilometre of the licence area. • Payment for compensation of historical costs: A fixed payment made in instalments to compen - sate the state for the costs of a geological survey and exploration conducted on a subsoil area that were incurred before the execution of a subsoil use contract. • Royalty tax: Tax applicable to the sale of extracted and processed minerals and payable by subsoil users under exploration or mining licences of solid minerals issued after 31 December 2026. Royalty rates range from 7% to 13%, depending on the level of mineral processing. The tax legislation in Kazakhstan does not distinguish between national and foreign investors. 4.2 Tax Incentives for Mining Investors and Projects Generally, subsoil users carrying out operations for the exploration and/or mining of mineral resources are not allowed to enjoy tax or other preferences. Investment preferences (including tax preferences) for subsoil users may be provided by conclusion of the following: • Investment project: The investment project is a set of measures providing for investments in establish - ing new manufacturing facilities, as well as upgrad - ing and modernising current manufacturing facili - ties. Investment preferences under an investment project are granted upon negotiation. • Agreement on investment commitments: Agree - ment on investment commitments is an investment project under the agreement concluded between the RoK government and a legal entity, outlining the commitments of the legal entity regarding the financing of capitalised subsequent expenditures and/or expenditures for the acquisition, production and construction of new long-term assets. It also
covers the financing of other costs that increase the value of long-term assets in accordance with international financial reporting standards and/or the requirements of the legislation of the RoK on accounting and financial reporting. (a) These commitments extend over a period of eight years, including the year in which the application for the conclusion of such an agree - ment is submitted, and the total amount should be no less than 75 million MCIs (approximately USD612,028,302). (b) In the event of concluding an agreement on investment commitments with a legal entity en - gaged in the mining and/or processing of solid minerals, such agreement is exclusively for activities in the field of mining and/or process - ing solid minerals. (c) An investment commitment agreement pro - vides tax stabilisation for ten years (except for VAT, emissions tax and certain other taxes). • Agreement on the processing of solid minerals: If the mining licence holder intends to create new facilities for the processing of solid minerals, or to expand or modernise existing ones, and the amount of investment exceeds 7 million MCIs (approximately USD57,122,642), then it is enti - tled to conclude a special processing agreement which, depending on the results of a negotiation, provides for investment preferences (including tax preferences). (Note that the parliament is currently considering increasing the investment amount to 70 million MCIs (approximately USD571,226,415) and revising the definition of a processing project to include the establishment of new solid-mineral processing facilities along with supporting produc - tion, energy and/or transport infrastructure.) • Conclusion of an intergovernmental agreement: In practice, subsoil users may obtain preferences out - lined in intergovernmental agreements. These pref - erences, encompassing various aspects including tax stabilisation, are contingent upon negotiations. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects A transaction involving the sale of subsoil use rights is liable to 16% VAT. In practice, parties to such transac - tions prefer to use “share deal” structures, since the
211 CHAMBERS.COM
Powered by FlippingBook