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The consumer

Consumer Profile
Since the end of Soviet rule, there has been a growing middle-class in Kazakhstan that holds responsibility for the majority of goods sold in the country. The country is considered an upper-middle-income country by the World Bank. An important trend of the past years was the slowdown of inflation: in 2021, inflation is at 6.4% (IMF), within the target corridor of the National Bank of 6-8%. With a rise in real incomes, consumers are increasingly demanding quality products and brand names. Inexpensive Russian and Chinese goods flow across Kazakhstan’s borders, but Western goods and expertise are also in demand. In some cases, consumers are willing to pay more for imported goods that offer higher quality and innovation. Customer service in Kazakhstan is often unsatisfactory; however, providing customers with after-sales service could give businesses an added value.
Slightly more than half of Kazakhs (57.5% in 2019 - World Bank, latest data available) live in cities, mostly in Almaty, Chimkent, Qyzylorda, Astana and Atyrau. Recently, women showed an increasing role in Kazakhstani society, being more active in business, political and social life.
Consumer Behaviour
After enjoying several years of economic growth, consumer confidence is hindered by the decline in worldwide oil prices which affected Kazakhstan’s economy. As a result, consumer spending has declined and shopping habits have changed. Moreover, most consumers are no longer turning to loans and credit to make purchases and mortgages are hard to come by despite the high demand for housing.
There is a strong disparity of salaries between different regions and sectors of activity: the salaries received in finance and mines are the highest, those of employees in social services, health and education are the lowest. Internet retailing has grown as consumers opened to this form of shopping to look for lower prices and a wider choice compared to brick-and-mortar shops.
Consumers Associations
National Consumer League of Kazakhstan
 

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Importing & Distributing

Import Procedures
All goods entering the customs territory of Kazakhstan are subject to declaration and customs clearance at approved customs clearance points. A declaration must be filed within thirty days of the arrival of the goods to Kazakhstan, but a brief declaration and notification on arrival of goods shall be submitted to the customs body within 24 hours after the goods cross the border and are placed at a temporary storage warehouse. Except for private persons permitted to transfer goods under a simplified procedure, a customs declaration must be filed by a Kazakhstani entity - that is, a business organization registered under Kazakhstani law or its affiliate or representative located in Kazakhstan, an individual entrepreneur registered in Kazakhstan, or a permanent resident of Kazakhstan. Foreign entities cannot deal directly with customs officials in Kazakhstan and are legally required to use services provided by licenced customs brokers having the right to operate in Kazakhstan.
 
A party declaring commercial goods at a customs office in Kazakhstan for their release for free circulation is responsible for submitting the paper and electronic copies of customs declarations (one copy of each per shipment), as well as accompanying documents. The Customs Cargo Declaration (5 copies) must be completed in either the Kazakh or Russian language. Other documents may be submitted in a foreign language. A customs officer, however, has the authority to request a translation of such documents into Kazakh or Russian as well as a notarization of the translation. In addition to the Customs Cargo Declaration, a party declaring goods is required to submit a set of other documents including invoices, a contract for the supply of goods, an import/export transaction passport, and shipping documents (e.g., bill of lading, airway bill, etc.) The transaction passport is the primary tool used in the framework of the currency control system. The transaction passport represents a cross-agency document filled out by the exporter/importer and reviewed by customs officials and representatives of the exporter/importer’s bank.

For more information, please visit the website of the Kazakh State Revenue Committee.
Distribution market players
The main retail distributors of food products, clothing, perfumery, household and other consumer products are Magnum Cash&Carry, RAMSTORE, INTERFOOD, ESENTAI GOURMET, STOLICHNY and SILK WAY SUPERMARKET (MyGuideKazakhstan).

Foreign distributors have started to invest heavily in the country:

  • Metro: the brand is present in the country with 6 stores since 2008 (according to the distributor's website)
  • Fix Price: as stated by the Russian market player on its website, there are currently 3 stores in Kazakhstan in 2021

Grocery retailer chains such as Ramstore, Gourmet and Macrocenter are expected to continue to expand. Magnum Cash&Carry leads sales in Kazakhstan and is part of the most successful top 10 companies in the country. According to Euromonitor International, its success can be attributed to its offering of good products at affordable prices. The company’s stores offer various consumer goods, including bakery products, meat, fish, gastronomy, grocery, cookery, confectionery, dairy, baby food, salads, bread, dough, cakes, and semi-finished products. It operates through 89 shopping centres in Almaty, Astana, Kaskelen, Karaganda, Taldykorgan, Shymkent and Petropavlovsk. To find out more about the Grocery Retailers in Kazakhstan, you can consult the country report by Euromonitor International.

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Operating a Business

Type of companies

Tovarichtchestvo s ogranitchennoi otvetstvennostiou is a limited liability company.
Number of partners: no minimum.
Capital (max/min): Minimum equivalent to 1,000 times the amount of the Monthly Calculation Index.
For small companies: KZT 100

Shareholders and liability: The liability is limited to the amount of share, except in the case of a bankruptcy caused by founders where the liability can be beyond the value of share capital.
Zakrytoye aktsionernoye obchtchestvo is a close cooperation joint stock company.
Number of partners: no minimum.
Capital (max/min): Minimum equivalent to 50,000 times the amount of the Monthly Calculation Index.
Approximately 350,000 USD as of 2021

Shareholders and liability: The liability is limited to the amount of share, except in the case of a bankruptcy caused by founders where the liability can be beyond the value of share capital.
General partnership
Number of partners: No minimum
Capital (max/min): USD 1,000
Shareholders and liability: Limited by contributions.
Limited partnership
Number of partners: No minimum
Capital (max/min): USD 1,000
Shareholders and liability: Liability of general partners is unlimited, that of limited partners is limited to their shares.
 
Setting Up a Company Kazakhstan Eastern Europe & Central Asia
Procedures (number) 4.0 5.3
Time (days) 5.0 11.8

Source: Doing Business - Latest available data.

 

Cost of Labour

Minimum Wage
In 2021, the minimum wage is KZT 42,500 per month according to the Ministry of Finance of Kazakhstan.
Average Wage
According to data from the Statistics Agency of Kazakhstan, the gross average monthly wage is around KZT 223,213 in 2021.
Social Contributions
Social Security Contributions Paid By Employers: 20% of covered earnings (3,5% for social insurance, 2% for health insurance, 5% for pension and 9.5% for social tax).
Social Security Contributions Paid By Employees: Every employee should pay 10% of his salary to a pension fund whose present withdrawals benefit them and they should also contribute to their own withdrawal as well as 2% of his salary for health insurance.
 

Intellectual Property

National Organisations
National Institute of Intellectual Property
Regional Organisations
Member of the Eurasian Patent Organisation
International Membership
Member of the WIPO (World Intellectual Property Organization)
Signatory to the Paris Convention For the Protection of Intellectual Property
 

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Tax Rates

Consumption Taxes

Nature of the Tax
Value added tax (VAT) - Қосылған құн салығы (ҚҚС)
Tax Rate
12%
Reduced Tax Rate
Several goods and services are VAT exempt, including turnover associated with land and residential buildings; specified financial services; services rendered by non-commercial organizations; services in the areas of culture, science and education; goods and services related to medical and veterinary activities; import of certain assets (a list is issued by the government); goods imported by individuals not for entrepreneurial purposes (subject to certain limitations); turnovers related to international transportation services; import of goods from the territory of a Eurasian Economic Union member country within the same legal entity (e.g., intra-entity transaction).
Zero-rated items include: export sales of goods, except for those that are exempt from VAT; international transportation services; sale of oil and lubricants by airports when fuelling aircraft of a foreign air carrier performing international flights; sale of fine gold; sale of goods to the territory of Special Economic Zones.
A reduced rate of 8% is applied upon the sale and import of goods included in the list of socially essential food products (COVID-19-related measure).
Other Consumption Taxes
Excise duties on all types of spirits, alcohol (up to KZT 7,500 per litre) and tobacco products, petrol (except for aircraft), diesel fuel oil, and certain motor vehicles.
 

Corporate Taxes

Company Tax
20%
Tax Rate For Foreign Companies
Residents are taxed on their worldwide income, while non-residents are taxed only on Kazakhstan-sourced income (in the form of corporation tax if they have a permanent establishment or withholding tax if they do not have a permanent establishment).
Capital Gains Taxation
Capital gains are treated as normal income and taxed at the standard corporate tax rate of 20%. Capital gains realised from the sale of shares and participation interests in Kazakhstan that do not derive their value from subsurface use property and are held for more than three years may be exempt.
Main Allowable Deductions and Tax Credits
Documented expenses incurred to generate income are generally deductible.
Depreciation of tangible and intangible assets is tax-deductible (at rates ranging from 10% to 40%); however, the Kazakh Tax Code does not provide any arrangements for the amortisation of goodwill. Start-up costs, although not explicitly defined by the Kazakh Tax Code, are generally deductible.

Interest, receivables not recovered after a three-year deadline, fines (except those that go directly to the state budget) and taxes (except corporation tax, excess profits tax and taxes paid in jurisdictions with preferential tax treatment) are all tax-deductible. Donations to charitable organisations give rise to a reduction of the tax base, up to 4% of annual taxable income (3% for large taxpayers subject to monitoring). Payments to foreign affiliates are also deductible if they allow the company to earn income in Kazakhstan.

Tax losses can be carried forward for up to 10 years. The carryback of losses is not permitted.

Kazakhstan also offers investment incentives in free trade zones in the form of total exemption from corporation tax and social tax as well as zero-rated property taxation. These incentives have specific expiry dates depending on the free trade area (between 2027 and 2043).
Other Corporate Taxes
Oil and gas companies are subject to excess profits tax at rates ranging from 10% to 60%. The tax base is the portion of net income that exceeds 25% of the deductions for this tax.
Employers are required to pay a social tax equal to 9.5% of the employee's gross salary (the employer pays a surcharge equal to 5% of the gross wage when the employee is engaged in a hazardous activity). Contributions paid by the employer to the Social Security Fund are at an effective rate of 3.5% (capped at KZT 297,500) while those paid to the Health Insurance Fund amount to 2% (capped at KZT 425,000).

A property tax is levied at rates varying between 0.1% and 1.5% (most common rate) of the average net book value of the immovable property, depending on the taxpayer's activity. Property tax was levied at 0% in 2020 to legal entities and individual entrepreneurs using a property for conducting tourism, hotel and catering activities, as well as for legal entities and individual entrepreneurs in large retail facilities, shopping and entertainment centres, cinemas, theatres, exhibitions, fitness and sports facilities (COVID-19-related measure).
A land tax is also levied at varying rates according to the size, quality and use of land.

There is no stamp duty, however, the Kazakh authorities reserve the right to impose a levy on the distribution of certain legal documents by public institutions.
A mineral extraction tax applies to the monetary value of the extracted volume of crude oil, gas condensate, natural gas, minerals, and groundwater. Rates for crude oil and gas condensate range from 5% to 18% (with a 50% reduction for hydrocarbons supplied to domestic refineries); those for natural gas is set at 10% (reduced to 0.5%-1.5% for domestic sales); and those for coal and minerals that have undergone initial processing are between 0% and 18.5%.
Other Domestic Resources
Consult the Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 

Double Taxation Treaties

Countries With Whom a Double Taxation Treaty Have Been Signed
List of countries that have signed a Double Taxation Agreement with Kazakhstan.
Withholding Taxes
Dividends: 0 (residents)/15% (non-residents without a PE)/20% (dividends paid to entities registered in tax havens), Interest: 10% (resident companies)/15% (non-residents without a PE; resident individuals)/20% (tax haven), Royalties: 0 (resident companies)/10% (resident individuals)/15% (non-residents without a PE)/20% (tax haven).

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