Investment Regimes in Kazakhstan: How to Obtain Incentives and Government Support for Business

During the webinar, the following issues were discussed: the legal foundation of business support, key investment regimes (Special Economic Zones, investment contracts, Astana Hub, and the Astana International Financial Centre), common mistakes made when submitting documents for state incentives, and business structuring models for the effective use of preferences.

1. Legal Framework and Objectives of the National Policy

The foundation defining the mechanisms and types of state support for business in the Republic of Kazakhstan is the Entrepreneur Code. State support is based on the National Investment Policy adopted by the Government of the Republic of Kazakhstan, which sets the goal, until 2029, of moving away from a resource-based development model, with a strong emphasis on digitalization and support for private entrepreneurship.

2. Special Economic and Industrial Zones (SEZ and IZ)

SEZs and IZs are key instruments through which the state stimulates entrepreneurship and represent an investment regime with a territorial focus.

Objectives and Benefits of SEZs:
 The purpose of Special Economic Zones is to attract direct investment for the creation of high-productivity and competitive industries. SEZ participants receive significant tax incentives, including exemptions from corporate income tax (CIT), value-added tax (VAT), land tax, and property tax, as well as a range of customs benefits.

Duration and Management:
 • SEZs are established for a period of up to 25 years, with the possibility of extension in accordance with legislation.
 • Industrial Zones are established for a period of up to 20 years.
 • Managing companies operate within SEZs and IZs; they maintain the register of participants, ensure the operation of the zones, and interact with the national development institute KazIndustry, which consolidates information on entities and the incentives they use.

Participation Requirements:
 To be included in the list of SEZ or IZ participants, an applicant must submit an application along with a business plan (describing the technological process) and a feasibility study (FS). It is essential that the project complies with the List of Priority Activities established for the specific zone.

3. Investment Projects and Contracts

Investment projects in the Republic of Kazakhstan are regulated by the Entrepreneur  Code and are divided into three types:

1. Investment Project: Involves investments in the creation, expansion, or modernization of production facilities.

2. Priority Investment Project: Corresponds to priority types of activities approved by the state.

3. Special Investment Project: Carried out in priority sectors, involves the creation of new production facilities with modern technologies, and receives an extended package of state support.

Types of Investment Contracts To receive government support, an investor must conclude a contract:

Cost Accounting and Reporting

• Costs already incurred by the investor may be considered when submitting an application if they were made within 24 months prior to the application date.

• Critical requirement: Separate tax accounting must be maintained for activities carried out under the investment contract and for other business activities. Failure to comply with this requirement (e.g., conducting secondary activities not declared in the business plan) may result in denial of incentives and additional penalties for previous periods.

4. Innovation Support (Astana Hub and AIFC)

Specialized regimes have been established to support the IT sector and attract international capital:

Astana Hub:
 Astana Hub is an international IT startup technopark and the operator of the national innovation system. It offers unique opportunities, often more attractive than SEZs, provided that the activity has a mandatory information component and complies with the List of Priority Activities.

Key benefits of Astana Hub:

• Tax incentives (exemption from corporate income tax and VAT).

• Participation in incubation and acceleration programs.

• Simplified procedures for attracting foreign specialists.
  
  

5. Astana International Financial Centre (AIFC):
 The AIFC is a legal, financial, and investment regime operating under the principles of English law and the law of Wales, providing additional guarantees for capital protection, especially for foreign investors. Incentives are granted to companies registered and licensed in the AIFC, and engaging in activities that serve its participants.

6. Common Mistakes and Business Structuring Recommendations

In practice, investors often face common reasons for being denied state support:

• Incomplete documentation or submission of inaccurate information.

• Outstanding taxes or mandatory payments.

• Lack of documents confirming the authority of a representative. For example, a change of director not reflected in the system (Investor Register or National Digital Investment Platform) may result in rejection.

• Non-compliance with business plan structure requirements (either too much or insufficiently consolidated information not corresponding to the format specified in the rules).

• Declared activities that do not match the List of Priority Activities of the selected regime.

• Failure to address comments or issues within the prescribed deadlines.
  
  

7. Recommendations for effective structuring:

• Incentives provided by different regimes (e.g., AIFC and investment contracts) do not accumulate. For maximum efficiency and project security, it is recommended to separate types of activities within a group of companies.

• For example, a management company can be established in the AIFC to attract financing and manage operations, while a production company can be located in an SEZ or IZ to receive tax benefits, engaging exclusively in the priority activity corresponding to the SEZ regime. In this case, separate tax accounting must be maintained for all business lines.

• Violation of obligations under investment contracts, particularly KPI non-compliance, which will be actively monitored by the state (starting in 2026 with enhanced performance control mechanisms), may result in unilateral contract termination, exclusion from the investment regime, and additional taxes and penalties.

Asel Iskakova

 Legal Practice Manager, Fortune Partners

Mobile: +7 705 446 28 96

Email: a.iskakova@fortunepartners.kz