Kazakhstan Chamber of Commerce in the USA


Customs Union Has Positive Impact on Economy, Finance Official Says 0

Posted on August 30, 2010 by KazCham

Kazakh Foreign Ministry

Since the entry into force of the Customs Code in early July, a sufficient time has passed to sum up the results of establishing the Customs Union (CU). In an extensive interview published in the Kazakhstanskaya Pravda daily, the country’s Vice-Minister of Finance Ruslan Dalenov advocated the benefits of creating the union with Russia and Belarus. He specifically stressed such measures as an abolition of licensing and registration in mutual trade, the extension of temporary storage, reducing the duration of release of goods and a list of documents, and other innovations. According to Dalenov, in the first half of 2010 Kazakhstan’s trade turnover with Russia compared to the previous year saw an increase of 41%, which is about US$ 2 billion, with exports and imports growing in roughly equal proportions.

With the CU establishment, the customs territory of three countries merged into a single customs territory which for entrepreneurs means their goods move between the countries without customs clearance and declaring. In Dalenov’s opinion, all these improvements are a considerable saving of financial resources and time for business.

To confirm his statement, he compared the procedure of sale of goods to Russia and Belarus with the trade between regions within Kazakhstan as there are no non-tariff measures. In other words licenses, permits, compliance with quotas are no longer required.

“There are also no restrictions on the export of currency in cash and other forms of currency control, although, on the Kazakh-Russian border some measures of non-fiscal customs control are temporarily maintained until July 1, 2011,” Dalenov added.

Owing to a single customs territory between the CU member countries, both goods of own production and foreign goods for free circulation can migrate free of charge. Earlier, in order to make a duty-free transit one had to confirm it by a certificate of origin, and the goods of third countries were taxed, which consequently restricted the potential of mutual trade. As for the import indirect taxes (VAT and excise), taxpayers now have an extended payment mechanism.

According to Dalenov, in comparison with the CU partners Kazakhstan has the lowest tax rates. Over a period of years the country has been systematically reducing tax burden and applied preferences.  The VAT rate used to be 20%, now it is 12%, corporate income tax also declined from 30% to 20%, and social welfare tax went down from 26% to 11%.

“All these indicators testify to a favourable investment climate for business development in Kazakhstan, including in the non-primary sector,” Dalenov stressed.
Another innovation is that from July 1, 2010, levying of indirect taxes on goods imported to Kazakhstan is now carried out by tax authorities, not customs authorities. There is no necessity to pay the VAT on imports and excise taxes at the time of crossing the border, but one should do it on the 20th day of the next month. The rates of indirect taxes are unchanged and regulated by the Tax Code.
“It is the easiest way to save money on registration and current assets,” Dalenov says.
In order to clarify the new procedure, the official makes an example: “When importing goods from Russia, on the 20th day of the following month a taxpayer must file a declaration and three copies of the application on the goods import and payment of indirect taxes, as well as the payment itself as a confirmation of export for its Russian partner. The latter only gets a VAT refund from the budget of his country. This ensures the trustworthiness of doing business. A person is entitled to pay the taxes before the deadline, and to date, the budget has received such payments in the amount of three billion KZT (US$ 20 million).”
With the abolishment of simplified regime for individuals, the level of shuttle trade has not declined, as previously the majority of them opted for cargo customs declarations. Annually individuals import goods amounting to US$ 4 billion, and goods that are transferred under the simplified regime worth only US $100 million, or about 2.7% in value. As can be seen, filing customs cargo declarations is the most popular.
The most topical issue for car drivers is that individuals may import cars to Kazakhstan for personal use at reduced tax rates. There is no need to pay import VAT and excise tax, but only the customs taxes and payments in the form of a unified customs payment. The rate of payment is determined by the Decree ? 682 from July 1, 2010, “On issues of movement of cars by individuals for personal use”. The amount of payment depends on the year of manufacture and engine volume.
According to Dalenov, in general, privileged regime applies to cars manufactured from three to 10 years ago. For such cars the rates vary from 0.35 euros per cubic centimetre to 2 or 3 euros, which is 3-4 times lower than the previous customary regime.
The volume of trade with Kazakhstan’s partners reflects the success of creating the CU, he said. In the first part of 2010, this indicator increased notably. In the structure of Kazakhstan’s foreign trade turnover, Russia and Belarus have a share of 18.2% and 0.6% respectively. The share of imports was 39% and 1.7% respectively. The share of Russia in export of goods composed 9.1%, while the share of Belarus – only 0.1% of total exports of Kazakhstan. In comparison with last year’s same period, the share of Russia’s foreign trade turnover increased and the trade turnover of Kazakhstan with Russia grew by 41%.
“It is noteworthy that export’s and import’s increase in equal measure reached on average one billion US dollars,” Dalenov concluded.

SOURCE:  Embassy of the Republic of Kazakhstan to the United States of America, No 24 August 26, 2010

New Customs And Tax Regulation 0

Posted on August 02, 2010 by KazCham

The President of RK signed a Law , introducing amendments to legislation on customs regulation and taxation. Customs regulation issues will be considered in one of the next issues of the Tax and Legal Alert.

This issue considers basic amendments to the Tax Code, which can be divided into
two groups:

1. Amendments related to entering into the Customs Union Chapter 37-1, establishing the procedure of VAT assessment on export and import of goods, performance of works, rendering of services within the Customs Union (CU), is added. Thus, special provisions for determining the following were introduced:

• VAT payers in CU;

• place of supply for goods, works, services;

• dates of turnover on selling goods, works, services, taxed import;

• amount of taxed turnover, import and export;

• taxation of international transportations;

• taxation of services on processing of give-and-take raw materials;

• turnovers and import exempt from VAT;

• confirmation of export goods;

• procedure of VAT offsetting in CU, etc.

Chapter 38 of Section 9 “Excises” was also amended. In particular, the list of excise goods, rates for some goods have been changed, the date of completing operations during excise goods import within the Customs Union has been determined, and regulations on excises administration within CU have been amended.

2. Remaining amendments

• New terms, such as “operator” and “import of goods” were introduced.

• Article 17-1 on participation in tax relations through operator during subsoil use operations based on PSA  was introduced.

• Article 56 was amended with such term as “consolidated tax accounting” within Joint Operations Agreement.

• Amendment to Article 238 was introduced, according to which in the course of determining the amount of taxed turnover all foreign currency transactions for the purposes of VAT shall be restated applying market exchange rate as of the date of

• Article 271-1 on peculiarities of implementing VAT liabilities by subsoil users, fulfilling their activity within PSA within ordinary partnership was introduced.

• Amendments to Article 224 were introduced regarding determining states with beneficial taxation. In particular, it is specified that if the state has legislation on financial information confidentiality or laws allowing keeping actual property
owner, income in secret, provided that there is available international treaty, stipulating for information exchange between competent authorities, and established procedures are implemented, then such state will not be considered as
having beneficial taxation.

• Article 308 “Taxation of Activity on Subsoil Use Operations” is provided in edited version. The section is amended with Article 308-1 concerning procedure of
implementing tax liability by individual subsoil users.

• Amendments are introduced as well to sections on tax audits, procedures
of VAT refund, tax registration, etc. Please, take into consideration that changes, made by this Law, have different effective dates.

The same Law introduces amendments to the Law of RK “Concerning Enactment of the Tax Code”

Thus, Article 21 establishes excise rates for excise goods for the following periods:

• from 1 July 2010 to 1 January 2011;

•  from 1 January 2011 to 1 January 2012;

• from 1 January 2012 and thereafter excise rates established by clause 4 of Article 280 of the Tax Code will be effective.

Article 42 is amended by provision stating that for the period from 1 July 2010 to 1
January 2012 the excess of input VAT amount over tax amount accrued under return as at the end of reporting period will be performed under procedure established by articles 273 and 274 of the Tax Code.

For this period, VAT amount, paid on import of goods, and on commissioned
property, plant and equipment, property investments, purchased biological assets,
shall not be subject to return. The exception is VAT amount, paid on purchased works and services from non- resident, not being VAT payer in RK.

Article 49-1, establishing from 1 January 2012 VAT payment through offsetting
method on goods imported to the territory of RK from the territories of Customs
Union member states, was introduced .

The list of goods, which is established by the Government of RK, includes equipment, agricultural machinery, freight rolling stock, helicopters, airplanes, sea
crafts and other goods. However, these goods shall not be imported for further
sale, except for property transfer to financial leasing.

Customs duties for importing vehicles by individuals for personal use

The Decree of the Government of RK , introduced unified beneficial rates of
customs duties, taxes paid during customs declaration of vehicles imported to
Kazakhstan by individuals for personal use. These rates are valid till 1 July 2011.
This Decree is effective from 2 July 2010.

PricewaterhouseCoopers Kazakhstan, Tax & Legal Alert No.12 July 2010

Enactment of the Customs Code of the Customs Union 0

Posted on July 01, 2010 by KazCham

Starting from 1 July 2010, the Customs Code of the Customs Union and the Agreement on Principles of Indirect Taxation upon the Import and Export of Goods, Performance of Work and Provision of Services (including Protocols to this Agreement) are entered into force.
According to these documents, starting from 1 July 2010, mutual trading within the Customs Union is subject to the new declaring and indirect taxation procedures, according to which indirect taxes are levied by the tax authorities and no customs fees are paid. Relevant changes to the Kazakhstan tax and customs legislation were signed by the President of
the Republic of Kazakhstan on 30 June 2010.

SOURCE: PricewaterhouseCoopers Kazakhstan, Kazakhstan: Tax & Legal Alert, No 10, July 2010.

Expanding Business Ties between the U.S. and Kazakhstan – 0

Posted on June 24, 2010 by KazCham

On June 10th, 2010, a unique event took place utilizing modern Internet technologies to bring together business people from around the world interested in the Kazakhstan market. Through the use of an Internet service that allows individuals to connect together at a “virtual conference,” specialists from the U.S., Kazakhstan, and Europe were able to come together to discuss the new customs union between Kazakhstan, Russia, and Belarus and how it will affect foreign companies in the region.

The event was organized by AmLaw Group together with the assistance and support of Grata Law Firm, the Embassy of the Republic of Kazakhstan, and the Kazakhstan Chamber of Commerce. AmLaw Group (www.amlawpro.com) is a specialized law firm in Washington D.C. that focuses on international trade and investments with extensive experience in Kazakhstan and CIS markets. AmLaw assists U.S. firms in their business and investment plans to enter Kazakhstan as well as working with Kazakh firms to expand their partnerships and business activities in the U.S. market.
The impetus for the event was the relative lack of information and events in the United States about market opportunities in Kazakhstan for U.S. business, especially for small and medium businesses that have limited resources. This recent webinar is the first of a planned series of events later this year devoted to market developments in Kazakhstan in order to better educate the American business community about Kazakhstan. Of particular interest is the fact that AmLaw’s client base consists primarily of small and medium-sized companies, which fits well with the diversification strategy of the government of Kazakhstan to support and expand the SME sector.
To this end, AmLaw is working together with the Embassy and the Kazakhstan Chamber of Commerce to organize trade delegations of small and mid-sized companies from Kazakhstan and the United States to expand business relationships. The goal of these delegations will be to put firms in contact with companies they need from each other’s market: suppliers, strategic partners, investors, legal advisors, etc. As Kazakhstani companies expand beyond their familiar markets in Eurasia, their ability to effectively work with partners, suppliers, and buyers from the U.S. will become increasingly important.
The delegations will try to focus on sectors of interest to SME’s as well as sectors in high demand in Kazakhstan, including franchising, agribusiness, food processing, and others. To receive more information about the planned delegations or more information about how to effectively work with U.S. partners, please contact Charles Raether, Managing Partner, AmLaw Group, charles@amlawpro.com or Anuar Kurzhikayev, Third Secretary, Embassy of the Republic of Kazakhstan, anuar@kazakhembus.com
News Bulletin of the Embassy of the Republic of Kazakhstan
Contact person: Zhanbolat Ussenov
Tel.: 202-232-5488 ext 118; Fax: 202-232-5845

Join us for a Webinar on June 10 “Kazakhstan and the Customs Union with Russia and Belarus” 0

Posted on May 24, 2010 by Sergey Sek

Space is limited.
Reserve your Webinar seat now at: https://www1.gotomeeting.com/register/505667832

What will the new customs union bring for business in Kazakhstan?

There have been a number of grand political pronouncements in the region regarding the new customs union between Kazakhstan, Russia, and Belarus, but what will it mean on a day-to-day level for business in Kazakhstan and the region in general? What are the practical consequences of the customs union and how will they affect companies operating in or exporting to Kazakhstan?

Join us for this unique event organized by AmLaw Group and Grata Law Firm with the support of the Kazakhstan Chamber of Commerce in New York for up-to-date information on the transition to the new customs union and the regulatory impact it will have on your business in the region.

Title: Kazakhstan and the Customs Union with Russia and Belarus: New Challenges or Opportunities?

Date: Thursday, June 10, 2010

Time: 1:00 PM – 2:00 PM EDT

After registering you will receive a confirmation email containing information about joining the Webinar.

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