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Developing legal provisions is a key to maintaining a balance between the interests of business and government, which should seek mutual benefit. A number of key areas of Unicase practice changed and international treaties concluded in 2022. Unicase pleased to publish the 10 most significant legislative changes of 2022 in Kazakhstan. |
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Subsoil use |
Amendments to the rules for obtaining an exploration licence for solid minerals fallen. The Ministry of Industry and Infrastructure Development (MIID) approves new regulations for holding an auction among applicants for the same subsoil area for the issuance of licences for the exploration of solid minerals. An auction helps to determine the priority for each coinciding subsoil area (block). The amendments also initially set a starting time for the signature bonus of 100 MCI. The signature bonus must be paid by the winner within 20 working days after the signing of protocol on the auction results. The new wording enters into force on 12 January 2023. Changes to the law on Subsoil Use and Subsoil Resources. In addition, the Law on Subsoil and Subsoil Use to be renewed: the Law specifies to liquidate or mothball individual technological objects (e.g. wells, buildings or machinery) based on a liquidation plan rather than the liquidation project as before, which reduces costs, preparation time and labour costs of required documentation. The amended act requires the above plan to be drawn up according to the phases of reconnaissance activities. It also eliminates the annual author's supervision previously stipulated for exploration work and trial operation without separate justification. 118 subsoil use licences in Kazakhstan terminated According to Kazakhstan's Minister of Industry and Infrastructure Development, Kairbek Usken bayev, there are 499 contracts and 1,738 licences for subsoil use for solid minerals. Also 118 licences terminated. Enterprises in the subsoil use industry, in particular exploration and production of solid minerals require legal protection on an ongoing basis and only highly qualified professionals are able to fully protect the client's interests in the face of pressure from the state authorities. |
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Antimonopoly law |
The application methods and deadlines changed. The Ministry of Industry and Infrastructure Development introduces a number of changes to the Rules for Activities of Natural Monopoly Entities. It allows filing electronically through a website as well as in paper form. In electronic format, the Committee will consider inclusion in the register and exclusion from the register of natural monopolists, as well as receiving confirmations from the authorised body. The Committee for the Regulation of Natural Monopolies of the Ministry of National Economy serves as the authorised body that manages the areas of natural monopolies, with the exception of certain activities. Also reduced to 15 calendar days to review applications for inclusion in the register of natural monopolies, as compared to 30 calendar days previously. We note that the period of analysis of the performance report on tariff estimates increased from 60 days to 90 calendar days. Temporary regulation of prices in selected commodity markets The Agency for the Protection and Development of Competition changes the rules for introducing temporary price regulation on certain commodity markets. In particular, the provision establishing a deadline for introducing such price regulation, which should not exceed 180 days. Presumably, the antimonopoly authority will introduce temporary regulation on a case-by-case basis based on the existing situation at the time of making its decision. State monopoly The law "On Approval of Prices for Services Provided by State Monopoly Entities in the Sphere of Information Technology and Information Security '' amended. The National Security Committee approved updated prices for services provided by public monopoly entities (state-owned enterprises) in the field of information technology and information security. |
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Energy and renewable energy |
Samruk Kazyna, KazMunayGas and Total Eren will build a wind farm in Kazakhstan. France's Total Eren, one of the world's largest companies in the field of renewable energy sources, signed an agreement with KazMunaiGaz and Samruk Kazyna under the patronage of the President of the Republic of Kazakhstan to build a RES project with a total capacity of 1 gigawatt in Zhambyl Oblast. The preliminary cost of the project is 1.9 billion US dollars. This project will strengthen international relations, benefit both domestic energy suppliers and citizens of our country, and increase the generation of renewable energy in the market by almost 50%. What makes the project unique is the special accumulation of electricity, which will allow the accumulation of surplus energy and stabilise the power grid. The Ministry of Energy adopted the form of the investment agreement. In addition, The Ministry of Energy adopted the procedure and form of the investment agreement between energy producers and the Ministry of Energy. Such an investment agreement takes place with enterprises which use gas as an alternative fuel, and implies a number of guarantees, including centralised purchase of electricity and individual tariffs. This method serves to cover the projected demand for electricity capacity. Earlier, in December, residential consumption of electricity exceeded production, as a result of which the KEGOC, the national grid operator, was operating in Failure Mode in several parts of the power system. The project creates the possibility of purchasing electricity for businesses with limited sources of energy supply. (An example is the Digital Assets Bill. See below). |
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Bankruptcy of Individuals |
Bankruptcy is a measure of last resort with a number of nuances and alternatives. The Law on the Recovery of Insolvency and Bankruptcy of R.C. Citizens signed by the President on 30 December provides for three new procedures for debtors who are in arrears in paying their debts for a long time, with the possibility of stopping the accrual of penalties. The procedure initiated by the debtor himself/herself, of his/her own free will. 1. Restoration of solvency - without imposing additional penalties, it suspends the accrual of penalties and allows payments to be spread over a longer period, according to a rehabilitation plan of up to 5 years, in row. In this case, the repayment of debts shall follow a plan drawn up by the financial manager together with the debtor and approved by the court. 2. Extra-judicial bankruptcy - total debts limited to 1,600 MCIs, absence of bankruptcy status of a natural person for 7 years, absence of property and delinquency in payment of debts for the last 12 months are grounds for initiating an extrajudicial bankruptcy procedure. 3. Judicial bankruptcy - the debtor's property must be disposed of in order to fulfil the obligations, the only dwelling cannot be disposed of if it is not pledged, the unlimited total debt, the other claims correspond to the extrajudicial procedure as a ground. The time limit for the procedure is no more than 6 months; According to emerging jurisprudence in general, we consider that the courts will make full use of the time limit. It is worth noting that bankruptcy status is subject to the following restrictions: for five years after the completion of the procedure, no loans can be granted and no pledges, guarantees or sureties can be accepted under bank loan and microloan contracts. |
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Regulation of digital assets |
The Senate returned the Digital Assets Bill to the Majilis. On the instructions of the head of state, K.K. Tokayev, a group of legislative acts developed to regulate the mining industry and digital assets in the Republic of the public of Kazakhstan. The draft law "On Digital Assets'' falls under this category. On the one hand, it brings closer the legalisation of cryptocurrency and other digital assets, as well as expanding the presence of cryptocurrencies on the market and forecasting new opportunities for entrepreneurs in the future, but on the other hand it introduces the obligation to pay four taxes, obtain a license and limits the methods of power supply of computing units. The bill introduces the following taxes:
The amount, method of calculation and payment of taxes and licence fees in accordance according to the tax code. Digital mining licences divide into several categories for a period of three years. These include:
Also imposes restrictions on sources of electricity:
Thus, RES projects that are actively developing in Kazakhstan can provide partial and, in the future, full support to the mining industry. Thus the cryptocurrency and renewable energy markets could cooperate productively in the future. If the law enters into force, those wishing to conduct business with cryptocurrencies or digital assets will need consultancy services more than ever before. |
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Moratorium and Small Business |
The moratorium extended until 1 January 2024. In order to support small and microbusinesses, the President signed amendments to the decree "On introducing a moratorium on inspections and preventive control and supervision with visits to the Republic of Kazakhstan". The main change is the deadline - the moratorium extended for one year from 1 January 2023 to 1 January 2024. The list of exemptions added to with the item "unscheduled inspections carried out in accordance with the Entrepreneurial Code", taking into account the latest changes the list of exceptions totals 15 items. Due to competition, investigations by tax authorities and other unfavourable factors every next quarter and year threaten small businesses and microbusinesses with termination of their activity. A moratorium would reduce the pressure on businesses and entrepreneurs by the state authorities. |
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Public-private partnership |
Changes in Consulting and Concession The Ministry of National Economy changes the procedure for determining the cost of PPP and concession project advisory services. Whereas KPPF JSC and Turar Healthkea NAO had previously set the cost of services, as they had exclusive rights to provide advisory support for PPP and concession projects, now the cost of services is currently set by the central and local executive authorities in accordance with an approved methodology. We would like to inform you that the advisory service for PPP and concession projects is a service that includes the development of tender documentation, drafting of PPP and concession agreements as well as advisory services in the negotiation process between public-private partnership and concession entities. The Ministry of National Economy has set limits on public commitments for PPP and concession projects. Such monetary limits approved for each region for the period from 2022 to 2024. The Ministry of National Economy of the Republic of Kazakhstan published the Rules for the selection of concession projects, Rules for tendering and preparation of tender documentation in a new version with the latest amendments. This is, in particular, due to the recent cancellation of the status of KPPF JSC and Turar Healthkea NAO as organisations having the exclusive right to provide advisory services for PPP and concession projects.
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Banking law |
There are no sanctions for the use of MIR cards. On 9 December 2022, the Agency for Financial Market Regulation and Development of the Republic of Kazakhstan received a clarification from OFAC, the U.S. Treasury Department's unit responsible for financial intelligence, planning and applying economic and trade sanctions, that Mir cards remain under surveillance, but that the government is not subject to sanctions for their use by individuals. No specifics about the position of legal entities were given in the explanation, but based on legal practice, most legal entities are a property of private individuals. Nevertheless, the decision to use Mir cards will depends of the boards of directors of second-tier banks. Until official statements from bank representatives or official publication of decisions - it is impossible to declare the availability or inaccessibility of Mir card functions. However, for Russian citizens and entrepreneurs with assets in Russia, this announcement brings only good news. Presumably, foreign bank regulators, who have not received such clarifications, expect how this mechanism will work in practice in the RoK and will act accordingly. We would like to remind you that the Mir payment system is Russia's national payment system, which provides services for payment transactions. It is also one of the few alternatives to foreign payment and clearing systems operating in CIS countries. |
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Memorandum of financial clearing between the Republic of Kazakhstan and the People's Republic of China In September 2022, the National Bank and the People's Bank of China signed a memorandum of financial clearing. This document strengthens international cooperation in the financial sector and increases settlement activity in Yuan on the territory of the Republic of Kazakhstan, particularly in the area bordering China. This event will be beneficial for the trade and investment activities of both countries. Thus, it expects to boost purchasing power, increase trade turnover, and simplify and accelerate trade and financial transactions for entrepreneurs on both sides of the border. It should be noted that in 2021, trade turnover between Kazakhstan and China will increase by 14%, and by 33% in 2022. That is, the turnover in the agricultural sector increased by 46.7% to $5,412.5 million. According to the Ministry of Agriculture, exports of domestic agricultural products grew by 62.2%, to 280.4 5 million, imports from China increased by 22.2% to $132.1 million. Total trade with China in 2022 totals $19.7 billion. Also during his visit, PRC President Xi Jinping signed an agreement to supply 11.15 million Yuan worth of equipment for a quality inspection laboratory in East Kazakhstan Region. The availability of a PRC-accredited quality testing laboratory will boost Kazakhstan's agricultural exports to China. |
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Significant Between People's Dogos thieves of the RoK for 2022 |
Kazakhstan and the Emirates: expanding the list of areas of mutually beneficial cooperation. Kazakhstan and the UAE signed an intergovernmental agreement on the establishment of a long-term strategic partnership for the development of projects in priority economic sectors. The document aims to implement projects in the energy, agro-industrial, logistics, pharmaceutical and financial sectors of the economy of Kazakhstan with a total investment of over USD 6 billion. Under the agreement, Samruk-Kazyna intends to establish strategic cooperation with ADQ and create a joint energy holding for the development of renewable and conventional energy. Kazakhstan and France are entering a new era of international business. At the investment table, representatives of major French companies signed a number of agreements aimed at the development of various areas in Kazakhstan. They relate to: construction of a wind farm in Zhambyl oblast, production of electric locomotives and their spare parts and railways, construction of an agricultural genetic centre, relations between IFCA and Paris Europlace, interaction of domestic gas industry enterprises and Air Liquide Eastern Europe S.A., nuclear energy, vaccine production, education of international level personnel, production of parachute systems, waste management, roofing materials production, technology transfer, export, financing and trading Filling business niches and preparing the market, including for future customers is the trend of the 22nd year and the decade to come. There are unprecedented opportunities for large businesses to expand and find business strategies. |
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List of signatories or transcripts from of NAPs: |
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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
