Astana International Financial Centre (AIFC) is a unique platform created to develop the financial and investment sectors of Kazakhstan and Central Asia. It is designed as a regional hub to attract foreign investments, strengthen economic stability, and diversify Kazakhstan’s economy. Located in the capital of Kazakhstan, Nur-Sultan (known as Astana until 2019), AIFC began operations on January 1, 2018, and has already demonstrated its effectiveness in implementing financial initiatives.
On the page:
- Development of capital markets
- Development of Islamic finance
- Banking services
- Development of financial technologies (fintech) and green finance
What is the purpose of AIFC?
AIFC was established with the following goals:
- Attracting foreign direct investment (FDI) into Kazakhstan’s economy.
Investors can purchase shares or stakes in companies registered in AIFC, gaining equity participation and dividend rights. Companies can list their shares on the Astana International Exchange (AIX), providing investors with access to securities trading. AIX offers a platform for trading stocks, bonds, and other financial instruments. Additionally, companies benefit from legal protection in English, based on the principles of English common law. - Developing the financial market and strengthening infrastructure to create a favorable business environment.
AIFC provides a simplified company registration process, facilitating a quick start for businesses. Registration is conducted through a specialized online portal, streamlining and accelerating the process. Company registration can be completed within 1–3 working days, significantly faster compared to traditional procedures. By September 2024, over 3,000 companies from more than 80 countries had registered with AIFC. AIFC also actively invests in training and developing financial professionals, offering educational programs and training sessions to enhance expertise in the sector. - Promoting Kazakhstan as a financial center on the global stage.
AIFC has partnered with organizations such as NASDAQ and the Shanghai Stock Exchange (SSE), integrating Kazakhstan into the global financial system. Through this partnership, the Astana International Exchange (AIX) leverages advanced trading technologies from NASDAQ, ensuring a high level of security and transparency. The Shanghai Stock Exchange has become a strategic investor in AIX, not only providing additional capital but also building trust among Chinese investors. SSE also supports Kazakhstani companies seeking access to Chinese capital through listings on AIX.
Key Activities of AIFC
Development of Capital Markets
- Establishment of Astana International Exchange (AIX): Founded in 2017, AIX started operations on November 14, 2018. It provides a platform for trading stocks, bonds, and other financial instruments, boosting capital attraction and the development of Kazakhstan’s securities market.
- Regional Equity Market Segment (REMS): AIFC introduced REMS to simplify listing requirements for small and medium-sized enterprises (SMEs), proportionate to their risk profiles. SMEs can present their products to potential investors. For example, startups can find investment opportunities through AIFC platforms.
Development of Islamic Finance
- AIFC developed and implemented regulations for Islamic finance and prudential supervision, expanding the market for Islamic financial products and issuers of Islamic securities.
- Legal frameworks based on English law support Islamic financial instruments such as sukuk (Islamic bonds), Islamic funds, and leasing services, making them attractive to local and international investors.
- AIFC collaborates with the Islamic Development Bank and the Islamic Corporation for the Development of the Private Sector to foster the creation of Islamic financial products and services. This partnership helps integrate Islamic finance into Kazakhstan’s economy by leveraging global expertise.
- AIFC regularly hosts events on Islamic finance, such as the Astana Islamic Economic Forum and seminars on sustainable development and green finance based on Islamic principles, promoting awareness and knowledge exchange among global experts.
Banking Services
- Banks registered in AIFC offer a range of credit products for individuals and businesses, including consumer loans, mortgages, and corporate financing.
- AIFC banks can open correspondent accounts with banks in Kazakhstan and abroad, facilitating access to international settlements and currency operations.
- The AIFC regulator, the Astana Financial Services Authority (AFSA), provides flexible and simplified licensing and regulatory procedures, enabling banks and financial organizations to enter the market quickly and introduce new services.
Development of Financial Technologies (Fintech) and Green Finance
- FinTech Lab: AIFC established FinTech Lab, a regulated environment where companies can test innovative financial and regulatory technologies without immediate full compliance with regulatory requirements.
- Fintech Accelerators: In 2021, AIFC’s Tech Hub, in partnership with Mastercard and the Internet Initiatives Development Fund (IIDF), launched the first fintech accelerator for banks in Kazakhstan. This program supports fintech startups and corporate innovation in Central Asia.
- Partnerships with International Companies: AIFC has agreements with organizations like Visa and Mastercard to foster fintech innovation in Kazakhstan and Central Asia.
- Green Finance Centre (GFC): Green finance involves financial tools and strategies aimed at sustainable development and addressing environmental challenges. These include financing projects and technologies that minimize environmental impact and promote sustainable economic growth.
- AIFC’s GFC develops policies and financial instruments for sustainable financing in Kazakhstan and Central Asia. It is the only entity in Central Asia accredited by the International Capital Market Association and the Climate Bonds Initiative.
- Issuance of Green Bonds: AIFC’s GFC provided full support for the first issuance of green bonds and a verified green loan in Kazakhstan, integrating green financing and taxonomy into national environmental legislation to encourage entrepreneurs using green finance tools
Preferential Tax Regime
Astana International Financial Centre (AIFC) in Kazakhstan offers a special tax regime aimed at stimulating financial and investment activities. Key tax incentives include:
- Exemption from Corporate Income Tax (CIT):
back to top
The standard CIT rate in Kazakhstan is 20%. Participants of AIFC are exempt from CIT on income derived from the following financial services provided within AIFC’s territory:- Banking services, including Islamic banking.Reinsurance and insurance brokerage services.Investment management services for investment funds.Brokerage, dealer, and underwriting services.Other financial services as determined by a joint act of AIFC, the Ministry of National Economy, and the Ministry of Finance of Kazakhstan.
- Exemption from Value-Added Tax (VAT):
back to top
The standard VAT rate in Kazakhstan is 12%, applied to most goods and services within the country and imports. AIFC participants are exempt from VAT on income from the aforementioned financial services. - Exemption from Personal Income Tax (PIT):
back to top
The standard PIT rate for residents in Kazakhstan is 10%. Foreign citizens working in AIFC entities (e.g., AIFC Authority, AIFC Court, AIFC Administration) or for AIFC participants providing financial and auxiliary services are exempt from PIT on income earned under employment contracts in AIFC.Mandatory employee insurance contributions and deductions remain applicable as per Kazakhstan’s legislation. - Exemption from Property and Land Taxes:
back to top
Progressive property tax rates depend on the asset value:- Up to 5 million tenge: 0.05%5 million to 10 million tenge: 0.08%Above 10 million tenge: 0.1%
- Exemption from Taxes on Investment Income:
back to top
Individuals and legal entities are exempt from PIT and CIT on income from:- Capital gains from the sale of securities listed on the stock exchange as of the sale date.Capital gains from the sale of shares or stakes in the charter capital of AIFC participants.Dividends and interest income from such securities.
These tax benefits are valid until January 1, 2066, fostering a favorable environment for business and investment through AIFC.
AIFC Legal System
back to top
The AIFC operates under a legal system based on the principles of English common law. Unlike the rest of Kazakhstan, which follows national legislation, AIFC has its own legal framework and independent court system rooted in Anglo-Saxon legal traditions. This includes international arbitration courts that resolve disputes based on transparent and globally recognized standards.
Court proceedings can be conducted in English, facilitating interactions with foreign investors. AIFC judges are international experts recognized for their specialization in financial and commercial law.
Decisions of the AIFC Court are enforceable in Kazakhstan without the need for recognition, in the same manner as decisions of local courts.
As of November 2024, the AIFC Court has handled over 150 cases involving commercial disputes, corporate matters, and financial operations. The average case resolution time is around six months, aligning with international standards for efficiency.
Participation Status in AIFC
back to top
Entities can operate in AIFC as either full participants or accredited market participants.
Full Participation
Full participation status is obtained by establishing a physical presence in AIFC through:
- Creating and registering a new company in AIFC.
- Registering a branch or representative office for companies already incorporated in other jurisdictions.
- Redomiciling an existing company to AIFC.
Branch and Representative Office
Requirements for Registration:
- Physical presence of at least one employee within AIFC.
- A registered legal address in AIFC.
Such entities can only engage in regulated activities for which their parent company holds licenses.
Redomiciliation
AIFC allows for redomiciliation, transferring the registration of a company from another jurisdiction (which also recognizes redomiciliation) to AIFC under a continuation certificate. This process is complex and lengthy.
Upon redomiciliation, the company:
- Retains its existing portfolio, credit ratings, and obligations to counterparties.
- Operates under AIFC’s legal framework, including tax benefits and corporate rules.
- Gains full participant status in AIFC.
Licensing
- General Rules: Activities of AIFC participants require a commercial license.
- License Duration: Licenses are issued for one year, with the option for annual renewal.
- Renewal Process: Requires submission of an application and compliance with regulatory conditions.
Major Companies in AIFC
- China Development Bank: A major Chinese bank financing various projects in Kazakhstan and Central Asia.
- Citibank Kazakhstan: An international bank offering a wide range of financial services in the region.
- Big Four: PwC, KPMG, Deloitte, and EY provide audit, tax, and financial consulting services.
- Renaissance Capital: An investment bank focusing on emerging markets and actively operating through AIFC.
- Aberdeen Standard Investments: A global investment company providing asset management services.
- Tengri Partners Investment Banking: A local investment firm offering corporate finance and asset management services.
- Swissquote Bank: A Swiss online bank specializing in trading and investments.
Conclusion
Astana International Financial Centre (AIFC) stands as a unique platform providing access not only to Kazakhstan and Central Asia but also to global financial opportunities. With its legal system based on English common law, attractive tax incentives, streamlined company registration, and support from the Astana International Exchange (AIX), AIFC fosters an investor-friendly environment. It appeals to a diverse range of businesses, from multinational corporations and investment funds to fintech innovators and green finance pioneers.
Advantages such as corporate and personal tax exemptions, simplified licensing, and robust Islamic finance and sustainable funding frameworks make AIFC an ideal choice for companies looking to expand into new markets and conduct international operations from a secure and reputable jurisdiction.
Van Rhijn & Partners offers expert guidance on all AIFC-related matters, helping your company maximize the opportunities available through this premier financial center.
