This content is from: Local Insights


On January 8 2003 the Parliament of the Republic of Kazakhstan passed the Law On Investments (No 375-II). The new law represents an effort to consolidate separate past legislation governing foreign and direct investment and to level the playing field for domestic and foreign investors.

The new law removes some of the incentives and assurances granted to foreign investors under the previous law. In particular, it abolishes a portion of a grandfathering clause protecting foreign investors who have not concluded a contract with the government from legislative changes to their detriment for a term of 10 years.

However, the new law does provide a general stability guarantee for contracts entered into between state bodies and investors. Exceptions to this guarantee include domestic legislation and international agreements altering conditions for the import, production and sale of excisable goods, as well as domestic laws aimed at "national and ecological security, health and ethics," a clause open to broad interpretation.

Under the new law, only Kazakh legal entities implementing an investment project are entitled to investment incentives from the Kazakh government. These include tax benefits, customs duties exemptions and state in-kind grants. To be eligible, investors must conclude a contract with an authorized governmental body, for which the new law lays out detailed procedural provisions.

As concerns customs duties, an earlier exemption for equipment and component parts contributed to the charter capital of a company has been removed. The new law provides a customs duty exemption only with regard to equipment imported for the purposes of implementing an investment project and only where in Kazakhstan such equipment does not exist, is unavailable in sufficient quantities, or where that which is available does not comply with the standards of quality required for the project's implementation. Such an exemption can be granted for a term of one year and prolonged for a maximum of five.

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