Setting up a Business in Kazakhstan
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Setting up a Business in Kazakhstan

With a robust economic growth of over 5% per year, a great strategic location, a skilled workforce and its rich natural resources, Kazakhstan is an attractive country for many people to do business. But what are your options as a foreigner to open a business in Kazakhstan? That I will discuss in this blog post.

On This Page

Stages of company registration in Kazakhstan
Stage 1: Choose the kind of entity you wish to establish
Limited Liability Partnership (LLP)
Share capital of LLP
Monthly Calculation Index (MRP)
Liability of Shareholders of the LLP
Who can be a founder of an LLP
Joint Stock Company (JSC)
Authorized capital of a JSC
Liability of shareholders of a JSC
Branches and Representative Offices
Stage 2: Come up with a company name
Step 3: Where can an Organization Register its Legal Address?
Stage 4: Prepare Documents for Company Registration in Kazakhstan
Step 5: Register With the Tax Office
C5 visa
Step 6: Issue an Electronic Digital Signature (EDS)
Step 7: Send the package of documents to the Center or through the portal Egov.kz.
Stage 7: Open a Corporate Account With a Bank in Kazakhstan
Special tax regimes
The Special Tax regime for sole entrepreneurs who bought a patent
Can a Foreigner Register As a Sole Entrepreneur in Kazakhstan
Doing Your Taxes With the Mobile App As a Sole Entrepreneur
Doing Your Taxes In Accordance with the Simplified Declaration As a Sole Entrepreneur or As a Legal Entity
Fixed Deduction
Eligibility for the Special Tax Regimes
VAT of LLP when applying the Special Tax Regime 3%
General Tax Regime
Conclusion

Stages of company registration in Kazakhstan

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Stage 1: Choose the Kind of Entity You Wish to Establish

Types of businesses in Kazakhstan that foreign nationals/foreign legal entities can set up 

Foreign citizens may register several types of businesses in Kazakhstan:

  • limited liability partnership (LLP)
  • joint stock company (JSC)
  • branches and representative offices

In this article we will give more details about these types of enterprises in Kazakhstan.  

Limited Liability Partnership (LLP)

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An LLP is a legal entity established by one or more individuals (people) or legal entities (companies), the authorized capital of which is divided into shares.

The shares of all shareholders in the capital and, accordingly, their shares in the value of the LLP property (share in property) are proportional to their contributions to the authorized capital, unless otherwise provided for in the constituent documents.

Share capital of LLP

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The initial authorized capital is determined by the total contributions of the founders and must be at least one hundred times the monthly calculation index. For an LLP in Kazakhstan, this minimum capital requirement is 100 MRP, which amounts to 369,200 Tenge in 2024.

The requirement for authorized capital does not apply in the following cases:

  • Small business entities
  • The state Islamic special financial company, which has a minimum authorized capital of zero.

Monthly Calculation Index (MRP)

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In Kazakhstan, the MRP (Monthly Calculation Index) is a unit of measurement used to calculate various fees, taxes, fines, and other financial obligations. The government sets the value of the MRP annually, and it is used as a standard reference point for determining amounts for various legal and financial purposes. The MRP helps simplify the calculation process and ensures consistency across different financial and legal frameworks.

Small business entities are IEs and legal entities engaged in entrepreneurship with an average annual number of employees not exceeding 100 persons and an average annual income not exceeding 300,000 – multiple of the MRP as of January 1 of the relevant fiscal year (as of January 1, 2024 – 1,107,600,000 tenge).

  • an organization engaged in microfinance activities;
  • payment organization

Liability of Shareholders of the LLP

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The obligations of the shareholders and the LLP are separate from each other. The LLP is not responsible for the obligations of its shareholders, and shareholders are only liable for the LLP’s obligations up to the value of their contributions to the authorized capital. Shareholders who have not fully paid their contributions to the authorized capital are jointly and severally liable for the LLP’s obligations up to the amount of their outstanding contributions.

Who can be a founder of an LLP

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According to the current legislation of the Republic of Kazakhstan, the founders of an LLP may be:

  • individuals (Kazakhstani citizens and foreigners) 
  • legal entities (Kazakhstani and foreign).

Joint Stock Company

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A Joint Stock Company (JSC), known as “Aktsionerlik kogham” in Kazakh language, is an organizational form of business best suited for large projects involving multiple investors.

Joint Stock Companies are the preferred choice for large enterprises and those looking to access public markets, maximizing growth and development potential in Kazakhstan.

Authorized Capital of a JSC

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Registration of a joint stock company in Kazakhstan requires compliance with the legal norms regarding the amount of the authorized capital. For JSCs, this amount is set at no less than 50,000 monthly calculation indices (MRP), which guarantees the seriousness of intentions and financial stability of the company from the very beginning of its activity. (this is approximately 184,600,000 Tenge, which is equal to about $385,000 USD at the time of writing). 

Liability of Shareholders of a JSC

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The liability of the founder of a JSC is limited only to the extent of the contributed part of the authorized capital.

Branches and Representative Offices in Kazakhstan

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  • They are not legal entities but serve as separate subdivisions of a legal entity located outside its main office.
  • Their activities and powers are governed by regulations approved by the parent legal entity.
  • Managers are appointed by the authorized body of the legal entity and operate under its power of attorney.
  • They are provided with property by the legal entity that established them.

Representative offices and branches operate based on regulations approved by the parent company. Their heads are appointed by the parent company and act under powers of attorney issued to them. Notably, both foreign citizens and citizens of Kazakhstan can be appointed as heads of representative offices and branches. Furthermore, a foreign citizen appointed as the head of a representative office or branch does not need to obtain a work permit in Kazakhstan. This is often a key factor for small businesses when deciding to start operations in Kazakhstan by opening a representative office or branch.

Stage 2: Come up with a company name

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The name of a legal entity, allows you to distinguish it from the general array of entrepreneurial structures operating in the market.

It is necessary to take into account the following rules:

  • the name of the company should not repeat the existing ones;
  • Latin names should be duplicated in the Kazakh language;
  • there should be no hint of connection with government agencies or illegal activities, such as casinos### Stage 2: Choosing a Company Name

    The name of your legal entity should distinguish it from other businesses in the market. When selecting a name, keep the following rules in mind:

    – The company name must be unique and not duplicate existing names.
    – Latin names must be translated into Kazakh.
    – The name should not imply any connection with government agencies or illegal activities, such as casinos.

You can check the correctness of the name on the website of the e-government of Kazakhstan Egov.kz

Step 3: Where can an Organization Register its Legal Address?

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The legal address, specified in the founding documents of a legal entity, serves as the reference point for assigning the organization to a specific territorial subdivision of the tax service and for sending official letters and notices. 

The following legal addreses can be used in Kazakhstan:

  • In non-residential premises: A notarized copy of the certificate of ownership must be submitted.
  • In leased premises: A copy of the lease agreement and written consent from the owner to register the tenant’s company at the specified address will be required. The consent letter should include the owner’s contact information, as the tax office will contact them to confirm their awareness of the company’s registration at their property.
  • In your own apartment (house) at the place of registration: A copy of the certificate of ownership must be provided. If the property is registered to another person (e.g., a relative), an additional authorization letter from the owner, written in free form, will be required.

Stage 4: Prepare Documents for Company Registration in Kazakhstan

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  • Application for company registration
  • Copies of identity cards of the founders (if the founders are natural persons)
  • Extract from the Unified State Register of Legal Entities (for legal entities)
  • Notification of the start of business activity
  • Document indicating the location (legal address in Kazakhstan)
  • Constituent documents
  • Power of attorney for lawyers (if necessary)
  • Receipt for payment of the registration fee
  • Licenses and permits (if required for the company’s type of activity)

All documents should be translated into Kazakh and notarized.

Step 5: Register With the Tax Office

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You need to visit the tax office to obtain an Individual Identification Number (IIN). Without it, you cannot open a bank account.

As of February 2024, obtaining an IIN remotely is no longer possible. You must come to Kazakhstan in person and apply at a Population Service Center (PSC) with a foreign passport if you are a citizen of Russia, Belarus, or the Eurasian Economic Union (EAEU). Citizens of Germany and other non-EAEU countries must have a C5 visa and can apply for the IIN only after this visa is issued.

C5 visa

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A C5 visa in Kazakhstan is a specific type of visa issued to foreign nationals for business or employment purposes. It is typically granted to individuals who intend to work, engage in professional activities, or conduct business in Kazakhstan. The C5 visa allows the holder to enter Kazakhstan legally and carry out the specified professional or business activities.

Step 6: Issue an Electronic Digital Signature (EDS)

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The EDS can be issued both offline at a Public Service Center (PSC) and online through the Egov.kz portal. For online registration, you will need to register your Kazakh phone number in the Database of Mobile Citizens of Kazakhstan. This number will be requested during verification on the portal.

The completed application for the signature, which contains a unique number, should be printed, signed, and submitted to the NAO GC “Government for Citizens” (GOC).

In addition to the application form, you must submit:

  • A document certifying the identity of the service recipient or their representative
  • The IIN document
  • A notarized power of attorney for the representative of the service recipient, indicating the authority to submit documents for the issuance of registration certificates of NUTS RK and sign the relevant documents to fulfill the assignment defined by the power of attorney (when representing the interests of the service recipient)

How Much Time it Takes to Register a Company in Kazakhstan

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As a rule, registration of a legal entity takes 10-12 days from the moment of preparation of all documents.

Stage 7: Open a Corporate Account With a Bank in Kazakhstan

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An account can be opened in any currency, including dollars and rubles.

Employees of the bank must be provided with a complete set of required documents, which includes:

  • Certificate of registration of the partnership, specifying the BIN (business identification number) of the legal entity.
  • A copy of the document that certifies the identity of the director.
  • A copy of the articles of association.
  • A copy of the resolution on the appointment of the director.
  • A power of attorney authorizing the person applying to the bank.
  • A document with specimen signatures.
  • Sample signatures of the director and chief accountant (if the company does not have a chief accountant, then only the director’s signature is needed).

Special tax regime

In Kazakhstan there are several variations of the so-called special tax regime.

The Special Tax regime for sole entrepreneurs who bought a patent

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In Kazakhstan a patent is an electronic document that confirms the payment of individual income tax (excluding individual income tax withheld at the source) and social contributions.
Under this regime, taxes are essentially paid in advance. The taxpayer determines the expected profit for the duration of the patent and calculates the taxes accordingly. This approach is taken because, with a patent, individual entrepreneurs are not required to maintain or submit tax reports to the relevant authorities.

If the calculations are correct and the individual entrepreneur meets all the requirements, the system will issue a decision confirming the successful completion of the tax regime registration process after verification.

The number of activities with which the special tax regime based on a patent can be used in Kazakhstan is, however, limited. The list of allowed activities laid down in paragraph 2 of Article 683 of the Tax Code of Kazakshtan. Currently these are the following acitivities:

  1. Plastering works
  2. Carpentry and joinery works
  3. Floor covering and wall cladding works
  4. Painting and glazing works
  5. Taxi services
  6. Freight transportation by road
  7. Real estate management for a fee or on a contractual basis
  8. Photography services
  9. Translation (oral and written) services
  10. Property leasing (rental)
  11. Leasing (rental) of transport vehicles
  12. Rental and leasing of entertainment and sports equipment
  13. Video and disc rental
  14. Rental and leasing of other personal and household goods
  15. Leasing (rental) of agricultural machinery and equipment
  16. Leasing (rental) of office machinery and equipment, including computers
  17. Sports education and recreation specialist training services
  18. Education services in the field of culture
  19. Other education services
  20. Auxiliary educational services
  21. Art activities
  22. Repair of computers and peripheral equipment
  23. Repair of communication equipment
  24. Repair of personal and household goods
  25. Hairdressing services
  26. Manicure and pedicure services
  27. Veterinary services
  28. Land plot processing services
  29. Cleaning services for residential premises and housekeeping
  30. Porter services at markets and stations
  31. Manufacture and repair of musical instruments
  32. Grazing of domestic animals

Can a Foreigner Register As a Sole Entrepreneur in Kazakhstan

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A foreigner can register as a sole entrepreneur in Kazakhstan if he as a permit residence permit for the country.

Doing Your Taxes With the Mobile App As a Sole Entrepreneur

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Besides buying a patent, sole entrepreneurs in Kazakhstan can also chose to do their taxes with a special mobile app. As for the sole entrepreneurs who bought a patent, the activities allowed with this variant are limited and generally overlap with the ones for the patent.

The primary difference between using the mobile app and the patent system lies in the tax payment schedule. Entrepreneurs who purchase a patent are required to pay their taxes upfront for the entire upcoming year. In contrast, users of the mobile app must pay their taxes on a monthly basis.

The e-Salyq business app, developed by the Ministry of Finance of the Republic of Kazakhstan. This app is specifically designed to assist individual entrepreneurs with their tax-related activities. It is available in Kazakh, English and Russian.

Doing Your Taxes In Accordance with the Simplified Declaration As a Sole Entrepreneur or As a Legal Entity

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If you have a small business in Kazakhstan, but do have some employees, you may be able to apply the the Special Tax Regime based on a simplified declaration with a rate of 3% of the company’s turnover minus the company’s salary costs if the company has less than 30 employees and a turnover of up to 24,038 MRP per year (88,7 million Tenge, which is around $184,880 USD at the time of writing)

Instead of a list of allowed activities, as for the patent and the mobile app, the simplified declaration has a list of activities that are not allowed when applying. These are:

  • Production of excisable goods
  • Storage and wholesale of excisable goods
  • Sale of specific petroleum products (gasoline, diesel fuel, fuel oil)
  • Lotteries
  • Subsoil use (except for activities with a mining license)
  • Collection and acceptance of glassware
  • Collection, storage, processing, and sale of scrap and waste of non-ferrous and ferrous metals
  • Consulting or marketing services
  • Activities in law, justice, and judicial services
  • Accounting or auditing services
  • Financial, insurance, and intermediary activities of insurance brokers and agents
  • Leasing and operation of commercial markets
  • Subleasing of trade facilities related to trade markets and public catering facilities
  • Hotel services provided by two or more taxpayers in the same hotel or non-residential building
  • Financial leasing activities

You are also not allowed to apply this taxation regime if you are active in different localities in Kazakhstan (unless you renting out your own properties in different localities, that is allowed when applying this regime).

Sure, here is the translated table with the column containing the numbers omitted:

Tax/ContributionRatePayment Due
Private Income and social tax3% of income (1.5% Income + 1.5% social tax)Once every six months, by August 25 (1st half-year), by February 25 of the following year (2nd half-year)
Mandatory Pension Contributions10% of your salaryMonthly, by the 25th of the following month
Social contributions for your own benefit3.5% of your salaryMonthly, by the 25th of the following month
Obligatory Medical Insurance5% of 1.4 times the Minimum wageMonthly, by the 25th of the following month
Tax payments with the Simplified Declaration in Kazakhstan

Fixed Deduction

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Fixed deduction is the last variant of the special tax regime we are discussing.

The tax regime in Kazakhstan featuring the use of a fixed deduction is outlined in Article 683 of the Tax Code. This regime offers simplicity in accounting, exempting individual entrepreneurs (IPs) from reporting requirements and simplifying forms for limited liability partnerships (LLPs). A key feature is the ability to deduct up to 30% of income without documentation.

Eligibility:

  • LLPs and IPs in small business sectors that meet the criteria.
  • Workforce: No more than 50 employees.
  • Income: Up to 144,184 MRP annually (approximately which is around $1,108,944 at the time of writing).
  • Excludes businesses involved in certain goods, lotteries, and consulting services.

Taxable Income:

Only income from sales of goods or services is taxed, excluding exchange rate differences, debt write-offs, and asset disposals. Documented expenses eligible for deduction include:

  • Purchase of goods
  • Employee-related expenses
  • Taxes and budget payments
  • Business trips

Tax Payments:

LLPs:

  • Corporate Income Tax: 20% (10% for agricultural producers)
  • VAT: 12% (if turnover exceeds the minimum)
  • Social Tax: 9.5% of employee expenses minus social contributions

IPs:

  • Individual Income Tax: 10%
  • Social Tax: 2 MRP minus social contributions
  • Mandatory Pension Contributions: 10%
  • Social Contributions: 3.5% of salary
  • Medical Insurance Contributions: 5% of 1.4 MZP
  • VAT: 12% (if turnover exceeds the minimum)

Additionally, both LLPs and IPs must pay:

  • 10% Individual Income Tax for salaries above 25 MRP
  • 10% Mandatory Pension Contributions
  • 3.5% Social Contributions
  • 3% Mandatory Medical Insurance
  • 2% Medical Insurance Contributions

Eligibility for the Special Tax Regimes:

  1. Employee Limit for Tax Period:
  • Simplified declaration: Maximum of 30 employees.
  • Fixed deduction: Maximum of 50 employees.
  1. Income Limit for Tax Period:
  • Patent or special mobile application: Up to 3,528 MRP (around 13 million Tenge, which is around $27,134 USD at the time of writing) (effective as of January 1 of the relevant fiscal year). According to paragraph 2 of Article 683 of the Tax Code of the Republic of Kazakhstan, the Special Tax Regime based on a patent or special mobile application is available only to individual entrepreneurs who have no employees.
  • Simplified declaration: Up to 24,038 MRP (88,7 million Tenge, which is around $184,880 USD at the time of writing).
  • Fixed deduction: Up to 144,184 MRP (532,3 million Tenge, which is around $1,108,944 at the time of writing).
  1. Exclusion from Special Tax Regime:
  • Production of excisable goods
  • Storage and wholesale of excisable goods
  • Sale of specific petroleum products (gasoline, diesel fuel, fuel oil)
  • Lotteries
  • Subsoil use (except for activities with a mining license)
  • Collection and acceptance of glassware
  • Collection, storage, processing, and sale of scrap and waste of non-ferrous and ferrous metals
  • Consulting or marketing services
  • Activities in law, justice, and judicial services
  • Accounting or auditing services
  • Financial, insurance, and intermediary activities of insurance brokers and agents
  • Leasing and operation of commercial markets
  • Subleasing of trade facilities related to trade markets and public catering facilities
  • Hotel services provided by two or more taxpayers in the same hotel or non-residential building
  • Financial leasing activities

Tax Breakdown:

  • 3% Special Tax Regime:
  • 1.5% corporate income tax.
  • 1.5% social tax (reduced by social contributions for employees).

Additional Taxes on Employee Salaries:

  • 10% Individual Income Tax (IPN)
  • 10% Mandatory Pension Contributions (PIT)
  • 3.5% Social Contributions (CO)
  • 3% Compulsory Medical Insurance (OSMS)
  • 2% Health Insurance Premiums (VOSMS)

These taxes are paid monthly, regardless of whether the LLP has income. The due date is the 25th day of the following month.

Thus, the special tax regime for small businesses may be applied by taxpayers who meet the following conditions:

1. The average number of employees for a tax period does not exceed for a special tax regime:

  • on the basis of a simplified declaration – 30 persons;
  • using a fixed deduction – 50 persons;

2. Income for the tax period does not exceed for a special tax regime:

  • on the basis of a patent or using a special mobile application – 3,528 MRP, effective as of January 1 of the relevant fiscal year;
  • on the basis of a simplified declaration – 24,038 MRP;
  • using a fixed deduction – 144,184 MRP.

3. Not engaged in the following activities:

  • production of excisable goods;
  • storage and wholesale of excisable goods;
  • sale of certain types of petroleum products – gasoline, diesel fuel and fuel oil;
  • lotteries;
  • subsoil use (except for subsoil use activities carried out on the basis of a mining license);
  • collection and acceptance of glassware
  • collection (procurement), storage, processing and sale of scrap and waste of non-ferrous and ferrous metals;
  • consulting or marketing services;
  • activities in the field of law, justice and justice;
  • activities in the field of accounting or auditing;
  • financial, insurance and intermediary activities of insurance broker and insurance agent;
  • leasing and operation of a commercial market;
  • subleasing of trade facilities related to trade markets, stationary trade facilities of categories 1, 2 and 3 in accordance with the legislation of the Republic of Kazakhstan on regulation of trade activity, as well as trade places, trade facilities and public catering facilities located on their territory;
  • activities of two or more taxpayers in the field of hotel services on the territory of one hotel or a separate non-residential building where such services are provided;
  • financial leasing activities

The special tax regime with a rate of 3% consists of two parts:

  • 1.5% corporate income tax.
  • 1.5% social tax (1.5% is paid minus social contributions for employees).

In addition to the basic 3% tax, a simplified LLP is obliged to pay taxes on employees’ salaries:

  • 10% IPN (individual income tax);
  • 10% PIT (mandatory pension contributions);
  • 3.5% CO (social contributions);
  • 3% OSMS (compulsory medical insurance);
  • 2% VOSMS (health insurance premiums).

These taxes are paid monthly, regardless of whether the LLP has income. The due date is the 25th day of the following month.

VAT of LLP when applying the Special Tax Regime 3%

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The obligation to register for VAT arises for an LLP on simplified taxation if its income exceeds the income limit. If an LLP’s annual income exceeds 20,000 MRP, it must: 

register as a VAT payer;

pay 12% tax in addition to 3% of the LLP’s income.

If the annual limit of 20,000 MRP ( around $153,000 in 2024) is not exceeded, there is no need to register for VAT.

It is necessary to change from the simplified taxation regime to the general taxation regime when the income exceeds 24,038 MRP for six months.

General Tax Regime

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In accordance with the tax legislation of the Republic of Kazakhstan, the following types of taxes are payable by the LLP under the general tax regime:

  1. Corporate Income Tax (CIT) 20% of the LLP’s taxable income (10% for agricultural producers);
  1. VAT at the rate of 12% (only if the minimum turnover exceeds 20,000 MRP, around $153,000 in 2024);
  1. Other taxes, depending on the type of the company’s activity (transportation, mineral extraction, excess profit, etc.).

From the wages of employees it is additionally necessary to pay:

  •  10% Personal income tax ;
  •  10% mandatory pension contributions;
  •  3.5% social contributions;
  •  social tax at the rate of 9.5% of the employer’s expenses paid to employees, minus the amount of social contributions;
  •  3% compulsory medical insurance (paid by the employer);
  •  2% medical insurance contributions (paid by the employee).

Conclusion

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We trust this overview has provided you with valuable insights into the opportunities for establishing your business in Kazakhstan. At Van Rhijn & Partners, we offer comprehensive services to help you incorporate your business, manage your accounting needs, and address any legal challenges you may encounter.

Feel free to reach out to us with any questions or for further assistance. We’re here to support you every step of the way as you embark on your business journey in Kazakhstan.

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