Business registration in Kazakhstan

Due to the geopolitical situation in the region and the imposition of sanctions by Western countries in the last few years, many foreign companies have been relocating their business to Kazakhstan. Kazakhstan and Russia are part of a customs union and Kazakhstan has an infrastructure for doing business; many government services operate online.

For IT business, tax and migration preferences have been created for participants in the international techno park Astana Hub and the Astana International Financial Center (AIFC) is a financial hub for the countries of Central Asia, the Caucasus republics, the countries of the Middle East and Europe.

Company registration in Kazakhstan

To register a company, you first need to decide on the organizational legal form of the company. It all depends on the needs of your business. This can be a LLP, JSC, branch or representative office. The organizational and legal form of a company largely depends on the needs of the business. As a rule, the optimal form of starting a business is LLP.

LLP is recognized as a partnership established by one or more persons, the charter capital of which is divided into shares of sizes determined by the constituent documents; The participants of the LLP are not liable for its obligations and bear the risk of losses associated with the activities of the LLP, within the limits of the value of the contributions made by them.¹

A branch is a separate division of a legal entity located outside its location and performing all or part of its functions, including the functions of a representative office. ²That is, a branch can engage in production or other commercial activities, but all transactions will be concluded by the branch on behalf of the head office.

A representative office is a separate division of a legal entity, located outside its location and protecting and representing the interests of the legal entity, performing transactions and other legal actions on its behalf, except for cases provided for by the legislative acts of the Republic of Kazakhstan.³ The representative office has no right to engage in production or other commercial activities.

Step-by-step LLP registration process

• To register LLP, a foreign citizen - founder and (or) director of the LLP must obtain an IIN and an Electronic signature. According to the new rules, from 2024 the personal presence of the applicant is required; the procedure for obtaining an IIN based on the power of attorney has been abolished. That is, from that moment on, remote registration of LLP became impossible. The procedure for obtaining an IIN and Electronic signature is free and takes up to 3 working days.

• Next, it is necessary to determine the types of activities of the company and determine the type of its economic activity (OKED).

• It is necessary to check in advance whether it is necessary to obtain licenses and permits for the types of activities of the LLP.

• Determine the amount of charter capital taking into account the planned financing needs of the company. The minimum size is 100 tenge. However, when opening a bank account, banks pay attention to the size of the authorized capital, especially in LLPs with a foreign element, so the optimal size of 100 MCI is recommended. ⁴100 MCI in 2024 = 369,200 tenge = 830USD. The authorized capital is tax-free and can be used for the development and expenses of the company until the company begins to generate income. Moreover, if the company plans to open a line of credit with a bank in the future, the size of the authorized capital will also matter. Therefore, at the registration stage, it is better to calculate the business needs in advance. In any case, the authorized capital may be increased in the future, but this will require changes to the constituent documents.

• Checking the Company name for uniqueness using the state database. The name of the company is indicated in the constituent documents in three languages: Kazakh, Russian and English. The check can be done on the portal https://egov.kz/cms/ru .

• Notarization of documents and certification with an apostille/legalization: founder’s passport, or an extract from the trade register if the founder of the LLP is a foreign legal entity.

• Notarized translation of documents from a foreign language into Kazakh and Russian.

• Preparation of constituent documents of LLP. (Charter, constituent agreement, protocol/decision on the creation of the LLP).

• Registration of the Company with the authorized body - “Government for Citizens” (takes 1-3 working days), is possible by power of attorney or online. If the founder is a foreign legal entity, then registration documents are submitted in person through the Public Service Center.

• After registration, a seal of LLP can be made, which takes 1 day. It should be noted that a seal for an LLP is optional; if the LLP intends to operate without a seal, this must be indicated in the LLP charter.

• Opening current accounts in banks of Kazakhstan. It takes from 3 to 10 working days depending on the bank and company that submits for registration.

In general, the procedure for registering a branch and representative office is very similar to the procedure for registering an LLP.

Work permit and C3 work visa for the director

The director of an LLP can be a foreign citizen. If the founder of the Company is a 100% foreign company or a foreign citizen, then the director does not need to obtain a work permit. It is enough to obtain an annual multiple-entry work visa of category C3, and then only in case you come to Kazakhstan.

A work permit and visa are not required for citizens of the EAEU countries. After concluding an employment contract, they need to obtain a temporary residence permit for one year.

A work permit is not required for foreign employees of participating companies in Astana Hub⁵ and AIFC⁶. For them, a C3 work visa and their family members, the visa is issued for a period of up to 5 years.

C5 visa for the founder of LLP

If the founder of the Company is an individual, it is required to obtain C5 business immigrant visa before registering the LLP. Registration of a legal entity, as well as participation in the authorized capital of commercial organizations by becoming founder of legal entities, is prohibited for foreigners who have not received an entry visa as business immigrants.⁷ C5 visa can be obtained by the invitation from a Kazakh company. For example, from a law firm that will help you with registration. If a visa is not obtained, the registration of the LLP may subsequently be canceled by the court.

Tax benefits for IT companies

For IT Companies. If you are an IT Company and your activities fall under the priority activities of the “International Technopark of IT Startups “Astana Hub”, your Company can receive tax benefits and exemption from obtaining work permits for foreign personnel by becoming a member of the “Astana Hub”.

Opening an account for LLPs and foreign legal entities in a Kazakh bank

Any person, including non-residents, can open an account in any bank in Kazakhstan. The geopolitical situation in the region also influenced the procedure for considering documents for opening accounts in Kazakhstan. After April 2022, banks tightened compliance controls regarding non-residents.

Nowadays, opening a bank account is a difficult issue for newly registered companies. There are quite a lot of refusals (without explanation) to open accounts for non-residents without registering a legal entity in Kazakhstan.

At the legislative level, as well as in the available official acts of the National Bank of the Republic of Kazakhstan, there are no restrictions on opening accounts by non-residents or residents with non-resident founders.

In current realities, each bank independently builds its own policy for opening accounts for companies with foreign participation.

First of all, local banks are not interested in opening accounts for non-residents who use the accounts for transit transactions. That is, when, in fact, the transaction has nothing to do with activities in Kazakhstan.

If a registered Company has a real office, a business plan, agreements on contracts in Kazakhstan then there is a high probability that you will be able to open an account.

Rules on foreign exchange transactions

Foreign exchange transactions between residents and non-residents are carried out without any restrictions, but subject to certain requirements.

All payments between residents must be made in the national currency, tenge, and all obligations under contracts between residents must also be in tenge.

However, if the LLP has entered into a contract with a foreign counterparty, then payment under the contract is possible in foreign currency.

Kazakh banks are required to notify the National Bank of the Republic of Kazakhstan about foreign exchange transactions, the amount of which is equal to or exceeds 50,000 USD. ⁸Such agreements are subject to accounting registration. As a general rule, the responsibility for registering foreign exchange agreements rests with second-tier servicing banks through which foreign exchange transactions are carried out. If the contract amount exceeds 500,000 USD in equivalent, then such a contract will be subject to special monitoring by the National Bank.

When Company has any banking transactions with a counterparty from Russia, it is necessary to check in advance the counterparty’s bank to see if its bank is on the sanctions list.
This can be done at https://sanctionssearch.ofac.treas.gov/ or from the bank manager.

Aigerim Massatbayeva