Main amendments to the legislation
1. Regarding the simplification of procedures for legalization of property
On November 13, 2015 the President of the Republic of Kazakhstan (further – the "RoK") signed Law №400-V "On amendments and additions to certain legislative acts on the amnesty of citizens of Kazakhstan, oralmans and individuals with a residence permit in the RoK in connection with the legalization of the property" (further – the "Law").
According to the Law, the deadline for legalization of funds and property was extended until December 31, 2016. The Law entered into force on November 30, 2015.
Further, the Law simplifies legalization of funds by offering two options:
- Option 1 - in accordance with article 8 of the Law, individuals would report funds in national or foreign currency transferred to bank accounts opened by the National postal operator in second-tier banks of the RoK at the individual's requests. These funds would not be subject to the 10% charge;
- Option 2 – an individual can report funds located abroad without transferring them to a Kazakh second-tier bank, but in this case the 10% charge will apply.
It should be noted that in both cases individuals must lodge to the State Revenue Committee a special declaration in the form approved by Order of Ministry of Finance of the RoK №593 dated November 27, 2015 (in force since January 2, 2016).
2. Regarding introduction of floating rate of export custom duty (further-"ECD")
On February 17, 2016 the Order of the Ministry of National Economics of the RoK №81 "On the approval of the list of goods to which export custom duties, rates, its duration and size are applied and Rules for the calculation of export customs duties on crude oil and oil products" (further – the "Order") was officially signed and published.
In order to support mining and oil and gas industries, starting from March 1, 2016 it is planned to introduce minerals extraction tax preferences along with the introduction of a floating export customs duty (further – "ECD") rate on crude oil which will depend on the market prices.
In case world prices for oil are lower than 25 US dollars per barrel, then the ECD rate would be equal to 0.
If world prices for oil are higher than 25 US dollars per barrel, then the ECD rate would be determined in accordance with the scale established in the Order.
In other words, with the increase of global oil prices, the ECD rate will rise too.
Additionally, ECD rate on fuel oil was reduced from 60 US dollars per ton to 30 US dollars per ton to ensure financial stability of oil and gas sector.
It is also proposed to set a seasonal export duty on fuel oil at 15 Euro per ton during the period from 1 May to 1 September.
3. Regarding ratification of the free trade Agreement between the Eurasian Economic Union (further - "EAEU") and Vietnam
On February 24, 2016 the President of the RoK has signed Law "On the ratification of the Agreement on free trade between the EAEU member-states and the Socialist Republic of Vietnam from the other side" (further – the "Agreement").
Within the framework of the Agreement a duty-free trade regime on major goods between the signatory countries is established.
Additionally, for certain goods a transition period is set after which import duties would be abolished. Some sensitive products (for instance, meet, milk, tea, coffee and etc.) will be subject to import customs duties on mutual basis.
The Agreement states the obligations of the parties for the protection of rights to intellectual property, establishes unified principles for the protection of competition and creates the foundations for close cooperation between the customs services and public authorities of the participating countries, which are responsible for the technical, sanitary and phytosanitary regulation.
As such, in order to protect the domestic market, the Agreement provides the application of special protective, antidumping and countervailing measures in accordance with the World Trade Organization rules.
Further, the Agreement establishes threshold of annual import volumes of sensitive EAEU textile goods and furniture, import of which is carried out at the rate of 0%. However, when the threshold of annual import volumes from Socialist Republic of Vietnam is exceeded, then the Agreement stipulates application of protective mechanism, according to which EAEU countries are entitled to introduce and implement customs duties at the rates set by EAEU Common Customs Tariff.
The changes become effective after 60 days from the date of receipt of the last written notice on completion of all ratification procedures in EAEU member-states and Vietnam.
4. Regarding administrative penalties for not reporting funds or property by citizens of the RoK
In 2014 the RoK had ratified the Strasbourg Convention on mutual administrative assistance in tax matters (further - "Convention"), besides the RoK other 66 countries and 16 offshore jurisdictions have joined it.
The purpose of the Convention is to improve efficiency of the information exchange practice between tax authorities of the member states which have joined the Convention.
In other words, in accordance with the Convention the member states are obliged to exchange information regarding existence of money and property of residents' of member-states.
Further, as it was already mentioned in the previous tax alerts, from January 1, 2017 the general declaration process starts, whereby Kazakhstani citizens will be required to report any property located abroad, funds, securities and ownership stakes in legal entities.
In connection with this, an administrative penalty for not reporting property in the amount of 250 minimum calculation indexes (further-"MCI") was introduced. In case of further violation within one year the amount of administrative fine is doubled to 500 MCI.
The corresponding amendments were introduced to article 272 of the Code of the RoK on Administrative Violations and would become effective from January 1, 2017.
5. Regarding ratification of the Treaty with the United Kingdom on mutual assistance in criminal cases
On February 24, 2016 the President of the RoK has signed Law "On the ratification of the Treaty between the RoK and the United Kingdom of Great Britain and Northern Ireland on mutual assistance in criminal cases" (further - the "Treaty").
This Treaty regulates the legal assistance in criminal matters, and also provides a full set of investigative actions that are necessary to prove the suspect's guilt.
The Treaty assistance also regulates the procedures for delivering documents, transferring evidence, restriction, confiscation of property and income obtained illegally.
The Treaty assistance regulates cooperation between the competent authorities of the RoK and the United Kingdom in mutual legal assistance during the investigation, prosecution and prevention of criminal offenses.
The Treaty was signed by the two countries in London on November 3, 2015.
Currently, the text of the Treaty has not yet been published in the press.
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.