1) The Legal Framework for International Business
2) Kazakhstan Investment Law
1) - THE LEGAL FRAMEWORK FOR INTERNATIONAL BUSINESS
The legal system and the rights of foreign businesses
Kazakhstan’s legal system is based on European-style codes, which are supported and supplemented by ancillary legislation. Most civil legal relations are governed by the Civil Code of the Republic of Kazakhstan,
the general part of which was enacted in 1994, followed by the enactment of a specific part to the Civil Code in 1999. The Civil Code was modelled on the Civil Code of the Russian Federation, which itself was inspired by the Dutch Civil Code.Without a doubt it represents a very progressive framework for civil law relations.
The Civil Code broadly recognizes, inter alia, the rights of foreign companies and citizens both to enter into transactions and to own property in Kazakhstan. These rights are enshrined in the Constitution and may be limited only by those restrictions set forth in the legislation of Kazakhstan.
The Kazakhstan legal system has well-developed legislation on companies, securities, land and property rights, natural resources, banking and creditors’ rights. In addition to laws of general application which apply to foreign investors, there are a number of bilateral and multilateral treaties in force to which Kazakhstan is a party which affect foreign investment and broad commercial issues. They deal with a wide
variety of investment issues, from double taxation to dispute resolution. Although the current legal system comprises most of the key legislation to enable normal business activity, the regulation of business and commerce in Kazakhstan continues to be influenced to some degree by historical notions of government control and regulation. This legacy, coupled with state institutions and a judicial system in which many foreign investors still lack confidence, presents a challenging environment in which to do business.
Basic forms of business organization
When establishing a business in Kazakhstan, foreign investors generally opt to create: (a) a branch of a foreign entity; or (b) a subsidiary, either wholly-owned or established as a joint-venture company in conjunction with a local or foreign partner, and in most cases organized as either a limited liability partnership (LLP) or a joint-stock company (JSC). There are no limitations on the percentage of ownership held by a foreign company in a Kazakhstan subsidiary, and no nationality restrictions apply with respect to designated
members of the board and the management of such entities.
BRANCHES - Under Kazakhstan law, a branch is characterized as a subdivision of the company it represents and not as a separate legal entity. In short, a branch is an office physically situated outside of the principal company’s geographic locale and carries on all or part of the principal company’s business in such area. As a branch is not a separate legal entity, it acts on behalf of the principal company rather than in its
own name and may not itself be held liable independently from the principal company.
SUBSIDIARIES (LLPs and JSCs) - A subsidiary differs from a branch in that it is a separate legal entity, thereby providing its founders with limited liability. A subsidiary is expressly not responsible for the debts of its parent company. However, a parent company may be liable for its subsidiary in very limited cases provided under Kazakhstan legislation, such as in the event that its actions cause the bankruptcy of the subsidiary. In general terms, the LLP and JSC are the most common types of organizations selected by investors for use in joint ventures or for wholly-owned subsidiaries. These two business forms are quite similar, especially with respect to issues of corporate governance and state registration. Between the two, the JSC is more complex and costly due to corporate formalities and share registration and minimum capital requirements.
The principal difference between these two forms is that the ownership of a JSC is evidenced by shares issued to shareholders, while the ownership of an LLP is evidenced by uncertificated participation interests held by the participants in the LLP. Another significant difference relates to the minimum capital requirements for JSCs, which is currently 500 times higher than the minimum requirement for LLPs.
The tax consequences of opening a branch or a subsidiary may depend upon the nature of the activity and the provisions of any double taxation avoidance treaty in effect between Kazakhstan and the home country of the investor. Kazakhstan tax legislation divides foreign entities into entities with or without a permanent establishment in Kazakhstan. A foreign entity with a permanent establishment is treated as a resident, whereas a foreign entity without such an establishment is treated as a non-resident. If a foreign entity is a non-resident of Kazakhstan having Kazakhstan-source income in the absence of a permanent establishment,
then corporate income tax, at a rate of 20 per cent, normally must be withheld at the source by the entity transferring such income to the non-resident. In this case the non-resident would be unable to deduct expenses incurred in connection with such income. Kazakhstan-source corporate income tax applies to foreign entities
deemed resident in Kazakhstan and must be paid at a rate of 30 per
cent in Kazakhstan directly by such resident.
The existence of a subsidiary does not lead to residency on the part
of a non-resident parent company for taxation purposes, because it is
treated as a separate taxpayer. Under the Tax Code, the basic rate for
the taxation of a subsidiary, like that of any resident legal entity, is 30
per cent on all income from sources within or outside Kazakhstan.Any
dividends paid to the shareholders of a subsidiary are further subject
to a 15 per cent withholding tax upon distribution.
As a resident office of a foreign legal entity, a branch is also taxed at
a rate of 30 per cent on all income from Kazakhstan sources. In
addition, a 15 per cent tax is assessed on the net income of the
permanent establishment. In this respect, the taxable base for the
above two taxes is calculated differently.
All but a few exempt categories of services and imported goods are
subject to a value added tax (VAT) of 16 per cent, and imported capital
goods are not an exempt category. The VAT is paid if the place of sale of
goods (services, works) is Kazakhstan. Generally speaking, export items
are subject to VAT, but at a zero rate. Entities in Kazakhstan are also
subject to various other types of taxes and mandatory duties in certain
cases, such as property tax, vehicle tax and special taxes for subsoil users.
Despite these regulations, qualifying foreign investors may be able
to secure limited exemptions from various taxes under the ambit of
specialized investment contracts negotiated with the authorized
agency of the Republic. The granting of exemptions and preferences to
foreign investors is commented on below.
The taxation of foreign businesses in Kazakhstan is also subject to
bilateral treaties on the avoidance of double taxation. Kazakhstan has
concluded such treaties with nearly 40 countries and has started, or is
preparing for, negotiations with an additional 23 countries. There are
currently over 30 bilateral treaties on the avoidance of double taxation
in effect, among them with the United States, Italy, Canada, Germany,
France, and Switzerland.
Investment protections and incentives
In early 2003, Kazakhstan adopted a new Investment Law, which coincided
with the repeal of the 1994 Law on Foreign Investments and the
1997 Law on State Support for Direct Investments, both of which
provided foreign investors far greater protections and opportunities to
obtain investment preferences. Under the new law, investment preferences
may be granted to investors engaged in listed priority types of
activity through the negotiation and conclusion of an investment
contract with the State Investment Committee and the proper
fulfilment of the investment programme set out in such contract.
In May 2003 the Government of Kazakhstan promulgated a list of
the priority types of activity, along with a model form investment
contract. The investment incentives may vary from contract to
contract, but may specifically include tax preferences, exemption from
customs duties, in each case within defined limits, and grants in kind
by the Republic.
Although the guarantees provided under the new Investment Law
apply generally to foreign and domestic investors who direct their
investments to entrepreneurial activities, the procurement of
investment preferences under the law requires an investment in a
Kazakhstan legal entity. In this respect, qualifying foreign investors
who conduct business through a subsidiary may have an advantage
over those acting through a branch.
The impact of the new Investment Law has created considerable
debate within Kazakhstan’s foreign investment community, which was
disappointed with the repeal of the 1994 foreign investment law.
Although some of the original protections found in the 1994 law
remain, others have been watered down considerably, and some have
been completely eliminated. For the most part, the protections that
were affected the most by the repeal of the 1994 law are found in other
pieces of Kazakhstan legislation, though they may not be so clearly
stated. In addition, many foreign investors will benefit from similar
protections set out in bilateral investment protection treaties
concluded between their governments and Kazakhstan.
Right to import and export goods
Under Kazakhstan Law, legal entities have the right to import or
export goods to or from Kazakhstan. Arguably, both branches and
subsidiaries have equal rights in this regard. The state may impose
import–export restrictions by law, Presidential decree or Government
resolution. At the present time, there are two types of legal restrictions
on the importation of goods into Kazakhstan: (a) protective
measures (ie protective duties and special import quotas); and (b)
licensing procedures. It is important to note that these restrictions
may apply concurrently.
With respect to licensing matters, the Government determines
which goods, services or works must be licensed. The state also determines
the procedure for issuing and documenting licences for
commission of export and import transactions.
Banking, currency controls and payments
For the purposes of currency regulation, branches are considered nonresidents
of Kazakhstan. Foreign investors operating through
branches may open tenge or hard currency accounts in Kazakhstan or
foreign banks, although a licence from the National Bank may apply to
the latter category. Branches may make payments in hard currency
both to residents and non-residents and may pay their employees in
hard currency. Non-residents may withdraw cash in foreign currency
from authorized banks only for payment of their employees’ salaries
and business travel expenses.
Under the currency regulations, subsidiaries are treated as residents
for currency purposes. They are only permitted to make payments in hard
currency to non-residents. All payments to residents of Kazakhstan,
including employees, must be made in Tenge. Subsidiaries may open
Tenge and hard currency bank accounts in Kazakhstan. Certain limitations
on hard currency transactions arise from subsidiaries’ status as
residents, such as restrictions on a subsidiary’s ability:
• to obtain foreign currency in Kazakhstan for the purposes of
repaying foreign currency loans to non-residents;
• to open credit or bank accounts abroad without a licence from the
• to carry out certain capital movement transactions that transfer
hard currency assets (cash or securities valued in hard currency)
from residents to non-residents, without the prior approval of, registration
with, or licence from, the National Bank.
Rights of foreign citizens to own or lease property
The Land Code recognizes the rights of foreign companies to acquire
land plots: (a) for future construction development (eg the acquisition
of land for the purposes of building a new office tower); or (b) which
have already been developed and support existing buildings, structures
and facilities (eg the acquisition of a land plot with an existing
building for the purposes of renovating the same for commercial office
space). Foreign companies also have the right to lease land in
Kazakhstan without regard to the foregoing restrictions.
Despite these facts, the ownership or lease of agricultural land is
still tightly controlled. Under the Land Code, Kazakhstan citizens and
Kazakhstan legal entities may now hold legal title to agricultural land
(in this respect the Land Code does not restrict the foreign ownership
component of such Kazakhstan companies). However, the Land Code
prohibits direct foreign ownership of agricultural land. Under Kazakhstan law, foreign citizens and legal entities may lease agricultural
land for farming and agricultural production for a period of 10
years or less.
Foreign investors must be mindful of their obligations under the
Kazakhstan Labour Code, as well as administrative requirements that
apply to the engagement of foreign employees. Both branches and
subsidiaries must obtain work permits prior to hiring foreign employees.
Upon receipt of a work permit, the employer must conclude an individual
employment agreement with each expatriate employee. There are
limited exceptions to the work-permit rule for branch directors in certain
sectors of the economy, which are not applicable to subsidiaries.
Choice of law for contracts
There are a number of provisions in the Civil Code regulating the
choice of law applicable to contracts involving foreign entities. In
Kazakhstan, applicable law of a contract is determined on the basis of
the Civil Code, international agreements to which Kazakhstan is a
signatory and recognized international customs.
Unless prohibited by legislation, contracts to be performed in
Kazakhstan may be governed by the law chosen by the parties. However,
foreign investors should note that there are a number of exceptions to
this rule. For example, contractual rights and obligations relating to
immovable property, or to the management of assets, must be governed
by the law of the country where the subject property is located.
Kazakhstan has an operating system of courts and accompanying
procedural legislation. The resolution of economic disputes of both
citizens and legal entities is governed by the Civil Procedure Code. The
Civil Procedure Code states that foreign citizens and legal entities
have rights equal to Kazakhstan citizens and legal entities.
Kazakhstan courts have exclusive jurisdiction over, amongst others,
the following issues: (a) rights to immovable property located in
Kazakhstan; (b) the legality of resolutions of administrative agencies
and their officials; (c) the legality of resolutions and decisions of state
agencies, bodies of the local self-government, public entities and state
officials in their official capacity; and (d) the legality of normative
2) - LAW OF THE REPUBLIC OF KAZAKHSTAN
January 8, 2003 # 373-II 3PK
This Law regulates the relations which are associated with investments in the Republic of Kazakhstan and defines the legal and economic basis of the stimulation of investments, guarantees the protection of the rights of investors when carrying out investments in the Republic of Kazakhstan, defines the measures of state support of investments, and the procedure for resolution of disputes with participation of investors.
Chapter 1. General Provisions
Article 1. Main Definitions That Are Used in This Law
The following main definitions are used in this Law:
1) investments - all types of property (except for the goods of personal use), including the objects of lease from the moment of lease agreement execution as well as rights to them which are invested by the investor into the charter capital of a legal entity or increase of fixed assets which are used for entrepreneurial activities;
2) investment activities – activities of individuals and legal entities on participating in the charter capital of commercial organizations or creating and increasing of fixed assets which are used for entrepreneurial activities;
3) investment preferences - privileges of the addressed nature which are granted to legal entities of the Republic of Kazakhstan that are implementing an investment project in accordance with the Legislation of the Republic of Kazakhstan;
4) investment project – package of measures stipulating investments in establishment of new facilities, enlargement and renewal of existing facilities;
5) an investment dispute - a dispute which ensues from the contractual obligations between investors and state bodies in connection with investment activities of the investor;
6) an investor – individuals and legal entities, which carry out the investments in the Republic of Kazakhstan;
7) state in-kind grants – property, which is owned by the Republic of Kazakhstan, conveyed or leased as a land tenure free of charge to legal entities of the Republic of Kazakhstan for implementing of the investment project;
8) the contract – an investment agreement stipulating investment preferences;
9) the model contract - a standard contract approved by the Government of the Republic of Kazakhstan and used when executing a contract;
10) the authorized body - the central executive body which is granted with the rights that are directly connected with the execution of contracts conclusion and control over the performance thereof;
11) the legal entity of the Republic of Kazakhstan – a legal entity, including any legal entity with foreign participation, incorporated in accordance with the procedure established by the legislation of the Republic of Kazakhstan.
Article 2. The Legislation of the Republic of Kazakhstan on Investments
1. The legislation of the Republic of Kazakhstan on investments is based on the Constitution of the Republic of Kazakhstan and consists of the provisions of this Law and other normative legal acts of the Republic of Kazakhstan.
2. This Law shall not regulate the relations which are associated with:
carrying out investments from the funds of the state budget;
investing capital into non-commercial organizations, including for educational, charity, scientific or religious purposes.
3. Relations which emerge in the case of carrying out investments and which pertain to the sphere of the effect of other legislative acts of the Republic of Kazakhstan shall not be governed by the provisions of this Law, except for the cases that are provided for by such legislative acts.
4. If an international treaty that has been ratified by the Republic of Kazakhstan sets forth the provisions other than those which are contained in this Law, then the provisions of such international treaty shall apply.
Article 3. Items of Investment Activities
1) Investors shall have the right to invest into any items and types of entrepreneurial activities, except for the cases, which are directly provided for by legislative acts of the Republic of Kazakhstan.
2) The legislative acts may determine activities and/or territories in respect of which investments shall be either limited or prohibited, as may be required by the necessity of protection of the national security.
Chapter 2. Legal Regime of Investments
Article 4. Guarantees of Legal Protection of Investors’ Activities on the Territory of the Republic of Kazakhstan
1. An investor shall be entitled to the full and unconditional protection of the rights and interests, which protection shall be backed by the Constitution of the Republic of Kazakhstan, this Law and other normative legal acts of the Republic, as well as by international treaties ratified by the Republic of Kazakhstan.
2. An investor shall have the right to be reimbursed for damages caused to such investor as a result of the enactment by a state body of an act conflicting with legislative acts of the Republic of Kazakhstan or as a result of an illegal action (a failure to act) of officials of such body, pursuant to civil legislation of the Republic of Kazakhstan.
3. The Republic of Kazakhstan shall guarantee the stability of the conditions of contracts entered into between the investors and state bodies of the Republic of Kazakhstan, except for the cases when changes to the contracts are made by agreement of the parties.
These guarantees shall not apply to:
1) changes in the Legislation of the Republic of Kazakhstan and/or coming into force of, and /or changes to the international treaties of the Republic of Kazakhstan, which change the procedure and conditions of import, manufacture, sale of the excisable goods;
2) 2) changes and supplements which are introduced to the legislative acts of the Republic of Kazakhstan in order to provide for national and ecological security, healthcare and morality.
Article 5. Guarantees of the Use of Income
Investors shall have the right:
1. to use income derived from their activities at their sole discretion after payment of taxes and other mandatory payments to the budget in accordance with the legislation of the Republic of Kazakhstan;
2. to open accounts with banks on the territory of the Republic of Kazakhstan in the national currency and (or) foreign currency in accordance with the banking and currency legislation of the Republic of Kazakhstan.
Article 6. Publicity of Activities of State Bodies in Respect of Investors
1. Official communications of state bodies of the Republic of Kazakhstan and normative legal acts, which affect the interests of investors, shall be published in accordance with the procedure established by legislation of the Republic of Kazakhstan.
2. Investors shall have free access to information regarding the registration and charters of legal entities, the registration of real estate transactions, and licenses issued, except for the information containing commercial, bank or other secrets protected by law.
Article 7. Control and supervision by State Bodies over Investors’ Activities
1. Control and supervision over the investors’ activity shall be carried out by the state bodies, which are granted such rights in accordance with the legislative acts of the Republic of Kazakhstan.
2. The procedures and terms for control and supervision over investors’ activity shall be established by the Legislation of the Republic of Kazakhstan.
Article 8. Guarantees of the Rights of Investors in the Case of Nationalization and Requisition
1. An involuntary taking of the property of an investor (nationalization, requisition) for the state needs shall be allowed in the exceptional cases which are provided for by legislative acts of the Republic of Kazakhstan.
2. In the case of nationalization, the investor shall be fully reimbursed by the Republic of Kazakhstan for the damages that were suffered as a result of the enactment of legislative acts of the Republic of Kazakhstan concerning nationalization.
3. Requisition of the property of the investor shall be carried out together with payment of market value of the property.
The market value of the property shall be determined in accordance with the established legislation of the Republic of Kazakhstan.
4. The valuation according to which the owner has been reimbursed for the requisitioned property may be challenged in court.
5. When circumstances due to which the property of an investor was requisitioned cease, such investor may demand the return of remaining property, but in doing so he shall return the amount of compensation he was paid, with offsetting the depreciated value of the property.
Article 9. Settlement of Disputes
1. Investment disputes shall be resolved through negotiations, including with involvement of experts, or in accordance with the procedure for resolution of disputes agreed by parties in advance.
2. In the case of the impossibility of resolution of investment disputes in accordance with the provisions of paragraph 1 of this Article, the settlement of disputes shall be carried out in accordance with international treaties and legislative acts of the Republic of Kazakhstan in courts of the Republic of Kazakhstan, as well as by means of international arbitration agreed by the parties.
3. Disputes, which do not pertain to the category of investment disputes, shall be resolved in accordance with the legislation of the Republic of Kazakhstan.
Article 10. Transfer of the rights of an investor to another person
If a foreign state or a state body authorised thereby makes a payment in favour of an investor under the guarantee (under insurance contract) which was granted to him in respect of investments carried out on the territory of the Republic of Kazakhstan, and such foreign state or the state body authorised thereby are assigned the rights (assigned the rights of claim) of the investor with respect to the mentioned investments, then in the Republic of Kazakhstan such assignment of rights (assignment of a right to claim) shall be recognized as lawful only in the case of the performance by the investor of investments in the Republic of Kazakhstan and (or) the fulfilment by the investor of his specified contractual obligations.
Chapter 3. State Support of Investments
Article 11. The Objective of State Promotion of Investments
1. The objective of state support of investments shall be the creation of a favourable investment climate to develop the economy and stimulate investments into the establishment of new facilities, enlargement and renewal of existing facilities, with application of up-to-date technologies, creation of new and preservation of existing jobs, as well as environmental protection.
2. The state support of investments shall mean the granting of investment preferences.
Article 12. Authorised Body
1. The state support of investments shall be carried out by the authorized body, as appointed by the Government of the Republic of Kazakhstan.
2. The authorized body, within its authority and in performance of its mission, shall have the right to involve specialists of respective state bodies, consultants and experts, being the Republic of Kazakhstan’s individuals and legal entities, in accordance with the procedure established by the Government of the Republic of Kazakhstan.
3. The activity of the authorized body shall be governed by the regulations approved by the Government of the Republic of Kazakhstan.
Article 13. Types of Investment Preferences
In accordance with this Law and by means of concluding a contract with the authorized body the following investment preferences shall be granted:
1) investment tax preferences;
2) exemption from customs duties;
3) state in-kind grants.
Article 14. The Procedure for Granting Investment Preferences
1. Investment preferences shall be granted within the priority types of activity, the list of which is approved by the Government of the Republic of Kazakhstan at the level of the classificatory of activity subtypes.
2. The Government of the Republic of Kazakhstan shall approve maximum investment volumes and duration of investment tax preferences for each priority type of activity, under which the authorized body shall grant investment preferences.
3. In case the established maximum volume of investments is exceeded, the duration of investment tax preferences shall be determined by means of an appropriate decision by the Government of the Republic of Kazakhstan.
4. Investment preferences are granted by means of execution of a contract with an investor.
Article 15. Conditions for Granting Investment Preferences
Investment preferences shall be granted subject to:
1) the compliance of the proposed investment activities with the list of priority activity types;
2) carrying out investments into fixed assets of a legal entity of the Republic of Kazakhstan to create new facilities, enlarge or renew existing facilities with application of up-to-date technologies;
3) the submission of necessary documents as set forth by Article 19 of this Law which evidence the availability of financial, technical, and organizational capability of the investor for carrying out of the investment project.
Article 16. Investment Tax Preferences
1. Investment tax preferences shall be granted for a term to be determined depending on the volumes of investments into fixed assets, but not to exceed five years.
2. The commencement date for investment tax preferences shall be established by the contract, in accordance with the Tax Code of the Republic of Kazakhstan.
3. Investment tax preferences shall not be granted with respect to a legal entity’s activities, to which a special tax regime applies, as well as activities under the contracts of subsoil use.
4. Investment tax preferences shall not be granted in respect of the fixed assets that have been conveyed to a legal entity of the Republic of Kazakhstan in the form of the state natural grant.
Article 17. Exemption from Customs Duties
1. Exemption from customs duties may be granted with respect to imported equipment and components thereof brought in to implement the investment project in the following cases:
1) unavailability on the territory of the Republic of Kazakhstan of manufacture of similar equipment and components thereof;
2) insufficient manufacture of similar equipment and components thereof on the territory of the Republic of Kazakhstan in order to carry out activities with respect to the investment project;
3) unconformity of similar equipment and components thereof manufactured on the territory of the Republic of Kazakhstan to the requirements pertinent to such project.
2. Exemption from customs duties shall be granted for the term of one year with possible extension of such term, but not for the term exceeding five years from the moment of the contract’s registration.
Decision on granting the exemption from customs duties and extension of the term thereof shall be made by the authorized body.
3. Notification on decision made in accordance with the paragraph 2 of this Article shall be sent to the authorized state body on the customs affairs.
Article 18. State In-kind Grants
1. State in-kind grants, in accordance with the procedure established by this Law, shall be given by the Government of the Republic of Kazakhstan or the authorized body with the consent of appropriate state bodies in the sphere of management of state-owned property and land resources into proprietorship or as a land tenure in accordance with the legislation of the Republic of Kazakhstan.
Approval of a state in-kind grant shall be carried out following fifteen working days from the moment of submission of a request.
2. The following may be conveyed as a state in-kind grant: land plots, buildings, constructions, machinery and equipment, computing equipment, measuring and regulating devices and units, transport vehicles (except for passenger motor-transport), industrial implements.
3. The valuation of state in-kind grants shall be based on the market price thereof and shall be carried out in accordance with the procedure that is established by the legislation of the Republic of Kazakhstan.
4. The maximal amount of a state in-kind grant shall not exceed thirty per cent of the volume of investments into fixed assets of the legal entity of the Republic of Kazakhstan.
If the value of the requested state in-kind grant exceeds the mentioned maximal amount, a legal entity of the Republic of Kazakhstan shall have the right to be conveyed the requested property after payment of the difference between the value thereof and the maximal amount of the state in-kind grant.
Article 19. Requirements to an Application for Investment Preferences
An application for investment preferences shall be accepted and registered by the authorized body if the following are available:
1) a copy of the certificate of state registration of a legal entity, notarized;
2) a copy of the statistical card of a legal entity, notarized;
3) a copy of the charter of a legal entity, notarized;
4) the business plan of the investment project that is compiled in accordance with the requirements as established by the authorized body;
5) documents which support the estimated value of construction works and expenditures for purchasing of fixed assets applied for the implementation of the project;
6) documents which indicate sources and guarantees of the project financing.
7) documents which support the amount (value) of the state in-kind grant requested by the investor and the preliminary consent for conveyance thereof.
Article 20. Terms of consideration of the application for investment preferences
An application for investment preferences shall be submitted for the consideration to the authorized body, which shall decide on granting investment preferences in accordance with the requirements established by Article 15 of this Law and shall send a reply in writing to the applicant within thirty working days from the date of the application registration.
Article 21. Contract Execution
1 The authorized body, within ten working days from the day of the adoption of the decision concerning granting of investment preferences, shall prepare for signature the contract with due regard to the provisions of the model contract.
2. The contract shall be registered by the authorized body within five days from the day of its signing and shall enter into force from the date of its registration.
Article 22. Conditions of the Termination of the contract
1. The effect of investment preferences shall be terminated upon the expiration of the term of the contract or may be terminated prior to the expiration of such term in accordance with the procedure which is established by this Article.
2. The contract may anticipatorily be terminated:
1) by the agreement of the parties;
3. The authorized body shall have the right unilaterally to terminate the contract following three months from the moment of giving the investor a written notice of termination in the following cases:
1) when a misrepresentation or a concealment of information that was presented by the applicant and that affected upon the decision, which were material to granting investment preferences has been revealed;
2) in the case of a failure by the investor to perform the obligations under the contract.
In such cases the investor shall pay amounts of taxes and customs fees which were not paid because of the investment preferences granted under the contract with application of fines which are provided for by the laws of the Republic of Kazakhstan;
4. In the case of anticipatory termination of the contract by the initiative of the investor unilaterally, the investor shall pay amounts of taxes and customs duties which were not paid because of the investment tax preferences that were granted under the contract with assessment penalties charged according to the procedure established by the legislation of the Republic of Kazakhstan;
5. If a contract is anticipatorily terminated by agreement of parties, the investor shall pay the tax and customs duties amounts that have not been paid under the investment preferences under the contract.
6. If a contract is anticipatorily terminated, the investor shall return either the property in kind conveyed as a state in-kind grant or the initial value thereof as of the date of conveyance of such property in accordance with the contract’s conditions.
Chapter 4. Final Provisions
Article 23. Stability of Contracts
Privileges granted on the basis of the contracts concluded with the authorized state body on investments prior to this Law’s coming into force shall remain valid until the expiration of the term established by such contracts.
Article 24. On Repeal of Some Legislative Acts of the Republic of Kazakhstan
The following legislative acts of the Republic of Kazakhstan shall be deemed repealed:
1) Law of the Republic of Kazakhstan of 27th December, 1994 "On Foreign Investments" (Bulletin of the Supreme Council of the Republic of Kazakhstan, 1994, ? 23-24, p. 280; 1995, ? 20, p. 120; Bulletin of the Parliament of the Republic of Kazakhstan, 1996, ? 14, p. 274; 1997, ? 11, p. 143; ? 13-14, p. 205; ? 17-18, p. 218; 1998, ? 5-6, p. 50; 1999, ? 21, p. 786; 2000, ? 10, p. 244);
2) Decree of the Supreme Council of the Republic of Kazakhstan of 27th December 1994 «On Procedure of the Enactment of the Law of the Republic of Kazakhstan "On Foreign Investments" (Bulletin of the Supreme Council of the Republic of Kazakhstan, 1994, ? 23-24, p. 281)
3) Law of the Republic of Kazakhstan of 28th February 1997 «On State Support of Direct Investments" (Bulletin of the Parliament of the Republic of Kazakhstan, 1997, N 4, p. 50; 1999, ? 21, p. 786).
President of the Republic of Kazakhstan