Doing business in Kazakhstan

An overview of other laws that affect business administration

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Transfer pricing issues

Kazakhstan’s transfer pricing legislation has wide applicability for all businesses. The impact for subsurface users is particularly broad.

The transfer pricing rules potentially apply to all cross-border transactions regardless of whether the parties are in any way related. In the case of subsurface users, it also applies to domestic transactions if they are related to cross-border transactions.

The Transfer Pricing Law allows for the following methods to determine a market price:

  1. Comparable uncontrolled price method
  2. Costs plus method
  3. Subsequent resale price method
  4. Profit split method
  5. Net margin method

There is no “safe harbor” allowed in terms of deviation from a market price, although the law does, in theory, recognize that there may be a range of market prices.

In determining market prices under the comparable uncontrolled price method, adjustments to prices obtained from officially recognized sources of price information are allowed in at least some cases, except where one of the parties to the transactions is tainted by association with a tax haven.

Employment regulations

The currently effective Labor Code was adopted in 2007 and codified legislative acts related to labor relations. The Labor Code regulates labor relations of residents and nonresidents in the territory of Kazakhstan.

An employment agreement must be concluded with each employee. The agreement should reflect rights, obligations and guarantees of an employee established by the Labor Code.

There is a specific requirement for an employer to obtain a work permit for a foreign individual (if applicable) before concluding an employment agreement with such an individual. Otherwise, a foreign individual should obtain a permit for employment independently.

Under the Labor Code, an employer is responsible for proper execution of an employment agreement. Employment agreements may be made for a fixed or indefinite term. An employment agreement may establish a probation period that cannot exceed three months.

Kazakh law establishes a MMS requirement. A working week is limited to 40 hours. The Labor Code does not allow overtime greater than 120 hours per year.

The minimum paid vacation period established by the Labor Code is 24 calendar days. Additional vacation days should be provided for employees working in dangerous or hazardous conditions.

Maternity leave is 126 calendar days (70 days before the birth of a child and 56 days after or up to 70 days in case of complication and for those with two or more children).

According to Kazakh legislation, an employer is obliged to insure employees from accidents during performance of their labor (official) responsibilities within 10 working days of the date of the state registration of the employer.

Import and export formalities and customs duties

Customs regulations of Kazakhstan

On 1 July 2010, the territory of Kazakhstan became part of the unified customs territory of the Customs Union with Russia and Belarus, which envisages unified customs legislation, tariff and non-tariff regulations of importing goods from third countries and free movement of goods of the Customs Union within the territory of the Customs Union.

The Customs Union establishes various types of customs procedures for customs clearance of goods including release of goods for internal consumption, temporary import, reimport, customs warehouse, duty free shops, transit of goods, export of goods and other customs procedures.

On 1 July 2011, the customs control of goods of the Customs Union crossing the border between Russia and Kazakhstan was cancelled. However, border and passport controls are still in effect.

Customs duties and classification of goods

The Unified Customs Tariff for goods imported from third countries came into effect on 1 January 2010. The Unified Customs Tariff determines the rates of customs duties and classification of goods. According to the Unified Customs Tariff, the rates of customs duties, which are normally based on percentage of the customs value of goods, can generally vary from 0% to 35%.

However, with respect to certain types of goods that are imported into Kazakhstan, there are transitional provisions that envisage lower customs duty rates for the transitional period from 2010 to 2015.

The amount of fees for customs clearance is subject to regulation by the domestic laws of the Customs Union member states. In Kazakhstan, the customs clearance fee equals €60 for the first page of the customs declaration plus €25 for each additional page of the customs declaration.

Since 1 July 2010, the customs value of goods is determined based on the Agreement on Determination of Customs Value concluded between the Customs Union member states, which applies to goods crossing the border of the Customs Union.

Some customs procedures envisage full or partial exemption from customs duties. Also, there are certain kinds of non‑tariff regulations, such as limitation or prohibition of import or export of goods.

Common Economic Space

On 1 January 2012, the Common Economic Space came into effect within the Customs Union member states, which envisages free movement of goods, work, services, capital and labor forces within the Customs Union territory and establishes common regulation of economic policy, currency, antimonopoly and other economic relations.


There is a list of activities that are subject to licensing in Kazakhstan. The range of business and professional activities that are subject to licensing is very broad. It is vital for investors to determine if they need a license beforehand. The penalties for not having licenses can be significant.

A license is a permit granted by a competent state body (licensor) to an individual or a legal entity for performing certain types of activities.

Depending on the activity, licenses are divided into the following types:

  • General license — granted for unlimited period and for various activities
  • One-time license — granted for a limited period and for a specific operation, as well as in the areas of gambling activity and house construction activity that is made at interest-holders’ cost

Licenses in the sphere of export/import are distinguished as follows:

  • General license (license granted to a participant in external economic activity by the Customs Union's state member for export/import of certain goods)
  • Exclusive license (license granted to a participant in external economic activity for exclusive export/import of certain goods)
  • One-time license (license granted to a participant in external activity based on a foreign trade agreement and which provides with the right for export/import of goods)

There are also operational licenses that are issued for banking and insurance operations.

Banking regulations

Banking system

The banking system of the Republic of Kazakhstan is a two-tier system. The first tier of this system is the National Bank of Kazakhstan (NBK), which is the central bank. The second tier includes commercial banks except for the Development Bank of Kazakhstan, which has special legal status.

Foreign banks have operated in Kazakhstan since 1993. Although these banks are not allowed to establish branches in Kazakhstan, they may establish wholly owned Kazakhstan subsidiaries.

The legislation also provides provisions on Islamic banking activities. The main difference is that Islamic banking does not participate in the deposit guarantee system.


Banking operations are subject to licensing by the NBK. In addition to licensing, activities that include cash operations, safe-deposit box operations and collection of bank notes, coins and values are subject to mandatory approval by the NBK.

Currency regulations

The currency legislation involves some formal requirements, but it does not impede most international business operations.

The Currency Legislation distinguishes the following parties to currency transactions: residents of Kazakhstan and nonresidents.

The currency legislation states that transactions between residents and nonresidents can be made in any currency. However, transactions among residents should only be made in tenge, the national currency of the Republic of Kazakhstan.

Individuals (residents and nonresidents) are allowed to bring cash foreign currency not exceeding the equivalent of US$10,000 in and out of the country without declaration with provision of data validating the source of this amount.

The currency legislation sets out two main regimes of currency regulation: registration and notification on currency transactions.