Doing business in Kazakhstan
Kazakhstan is notable for its abundant energy reserves, political stability and strong investment incentives. As the largest economy in Central Asia, it has taken steps to encourage foreign business. However, language barriers, administrative procedures and regulatory oversight can pose challenges to market entry.
Kazakhstan is the largest economy in Central Asia, spanning over 2.7 million square km. It possesses substantial reserves of oil, gas, uranium, and various minerals, while also maintaining a significant presence in agriculture and metallurgy.
In recent years, Kazakhstan has emphasized diversification and private sector growth. In 2023, GDP reached KZT 119.5 trillion (approx. USD 270 billion), driven by oil exports, transport infrastructure and manufacturing. The country is a member of the Eurasian Economic Union (EAEU), the World Trade Organisation (WTO) and holds extensive trade agreements with the EU, China and the US. Its population exceeds 20 million, with Almaty and Astana serving as major business hubs.
Advantages of doing business in Kazakhstan
Kazakhstan offers an investor-friendly climate driven by ample natural resources, favourable tax policies and a strategic Eurasian position.
The government actively encourages foreign direct investment (FDI), especially in energy, logistics and agriculture. Investors benefit from industrial zones, simplified tax regimes and bilateral treaties with key economies.
Additionally, the country boasts a relatively young population and well-developed transport connections linking China, Europe and Central Asia.
Challenges of doing business in Kazakhstan
Despite its appeal, conducting business in Kazakhstan entails navigating a number of administrative and regulatory hurdles. The country ranks in the top 20 most complex jurisdictions according to the Global Business Complexity Index.
Bureaucracy may slow incorporation and licensing processes, while business documentation is often required in Kazakh or Russian. Foreign investors must cultivate local relationships to address legal and procedural requirements effectively.
Labour law, tax compliance and foreign employee permits add further complexity. Regional practices and interpretation of regulations may differ, requiring close attention and local expertise.
Compliance and the regulatory environment in Kazakhstan
Kazakhstan’s regulatory framework is moderately intricate, combining formal legal structures with local nuances.
Businesses must register with the Ministry of Justice and submit financial statements annually under National Financial Reporting Standards (NFRS) or IFRS. Registration with the tax authorities and social security bodies is also mandatory.
The legal system recognizes both civil and commercial law with arbitration available for certain disputes. Transparency laws mandate the disclosure of beneficial ownership and directorships. The country adheres to FATCA and CRS agreements and is enhancing its anti-money laundering (AML) framework.
Hiring and employment in Kazakhstan
Labour law in Kazakhstan is regulated by the Labour Code and various governmental resolutions. Employment contracts must be written and registered with the unified employment database.
The standard work week is 40 hours with mandatory rest periods and limits on overtime. Annual leave is a minimum of 24 calendar days. Social contributions include 5% for pensions and 3% for healthcare from employers, with additional obligations for insurance.
Hiring foreign employees requires a permit with some exemptions for strategic sectors or intra-group transfers. Payroll and HR compliance are closely monitored by authorities.
The financial and tax environment in Kazakhstan
Kazakhstan's tax system is considered competitive compared to many global jurisdictions. Corporate income tax stands at 20%, with specific incentives and exemptions available within special economic zones (SEZs).
The standard VAT rate is 12%. Resident companies are subject to taxation on their worldwide income, whereas non-residents are taxed on income sourced from Kazakhstan. Withholding tax applies to dividends, interest, and royalties, generally ranging from 10% to 20%, though treaty reductions are common.
All entities must maintain local accounting records and file regular tax declarations. Currency controls are enforced for transactions involving non-residents, particularly those outside the EAEU.
Starting a business in Kazakhstan
Foreign investors have the option to establish various business structures, such as limited liability partnerships (LLPs), joint-stock companies (JSCs) and branches.
The LLP is the most common structure, requiring one founder and a local office. Share capital requirements differ based on the activity but are generally low. Registration is done through the “electronic government” portal, typically within a few days, though local documentation and translations can extend timelines.
All entities must register for tax, social contributions and statistical codes and comply with licensing when applicable.
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