KAZAKHSTAN Law and Practice Contributed by: Timur Odilov, Mikhail Abdulov, Olzhas Abubakirov and Dauren Sadykov, Haller Lomax LLP
• Agreement for investment project. The invest - ment project is a set of measures providing for investments in establishing new, as well as upgrading and modernising current manu - facturing facilities in eligible regions. Such an agreement would grant certain benefits such as exemption from import VAT for certain specified products during five consecutive years. • Agreement on investment commitments. Agreement on investment commitments is an agreement concluded between the RoK government and a legal entity, outlining the commitments of the legal entity regarding the financing of capitalised subsequent expendi - tures and/or expenditures for the acquisition, production, and construction of new fixed assets. It also covers the financing of other costs that increase the value of fixed 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 agreement is submitted, and the total amount should be no less than 75 million MCIs (approximately USD553,800,000). (b) In the event of concluding an Agreement on Investment Commitments with a legal entity engaged in the mining and/or pro - cessing of solid minerals, such agreement is exclusively for activities in the field of mining and/or processing solid minerals. (c) An investment commitment agreement provides tax stabilisation for ten years (except for VAT, emissions and certain other taxes). • Agreement on the processing of solid miner - als. 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 invest - ment exceeds 7 million MCIs (approximately USD51,688,000), then it is entitled to con - clude a special processing agreement which, depending on the results of a negotiation, provides for investment preferences (includ - ing tax preferences) (Note that the parliament is currently considering increasing the invest - ment amount to 70 million MCIs (approxi - mately USD 516,880,000)). • Conclusion of an intergovernmental agree - ment. In practice, subsoil users may obtain preferences outlined in intergovernmental agreements. These preferences, encompass - ing various aspects, including tax stabilisa - tion, are contingent upon negotiations. 4.3 Transfer Tax and Capital Gains on the Sale of Mining Projects The transaction involving the sale of subsoil use rights is liable to a 12% value-added tax. In practice, parties to such transactions prefer to use “share deal” structures, since the sale of shares in local companies is exempted from value-added tax. 5. Mining Investment and Finance 5.1 Attracting Investment for Mining Despite possessing a substantial quantity of mineral resources, Kazakhstan secured the 79th position out of 86 in the Fraser Institute’s Annual Survey of Mining Companies in 2023, being in the bottom ten (beginning with the worst) of the Investment Attractiveness Index. The reason for this is low investor perception of the political environment and understated geological poten - tial.
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