Protection of investments in agricultural sector of Kazakhstan

agribusiness Kazakhstan-1

Protection of investments in Kazakhstan is specified in the Law of the Republic of Kazakhstan “On Investments”, where rights of foreign investors’ and the stability of signed contracts are guaranteed. Also, Kazakh state bodies have established the most favored nation regime. On an ongoing basis, work is being done to reduce administrative barriers such as standardization of government services and a shortened time of issuance of permits. In 2017 the government unilaterally set a visa-free regime for citizens of 31 countries. This assists in expanding business contacts and international collaboration. Kazakhstan is considered to be one of the leaders of the CIS countries due to favorable conditions for investors. This fact is confirmed by international Doing Business ratings, where Kazakhstan is ranked 77th in terms of its “Ease of Doing Business” indicator, and in terms of “Protection of minority investors” – the 25th position among 189 economies of the world.

Kazakhstan is considered to be one of the leaders of the CIS countries due to favorable conditions for investors. This fact is confirmed by international Doing Business ratings, where Kazakhstan is ranked 77th in terms of its “Ease of Doing Business” indicator, and in terms of “Protection of minority investors” – the 25th position among 189 economies of the world.

The priority of the agribusiness in the state policy can be acknowledged by the preservation of tax benefits, the growth of subsidies and loans to the entities involved in agribusiness. In Kazakhstan VAT equals to 12%, while in Russia – 18%, and in Belarus – 20%. In addition, for all agricultural producers, both domestic and foreign, there is a privilege in the form of a special tax regime, which implies a 70% reduction in fees for all types of taxes, with the exception of land and individual income tax levied at the source of income.

The year 2016 was marked by a tax reform in agribusiness. According to it, personal subsidiary plots were exempted from individual income tax when selling products to legal entities. The reform provides a refund of VAT to procurement organizations when purchasing products from private households and small farmers; the conditions of the application of a special tax regime have also been eliminated.

Besides that, the program “Agribusiness 2020” provides for an increase in state support by 4.5 times by 2020 and in the amount of credit by financial institutions.

Concerning the rules of land use, previously foreigners and companies with a predominant foreign participation could use agricultural land for a maximum of 10 years, since December last year, the maximum period is 25 years. This period is more attractive for foreign investors, and it already gave greater confidence that the investment will pay off.

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