Annex B. Measures notified by Kazakhstan for transparency in the meaning of the OECD Declaration on International Investment and Multinational Enterprises

A. Measures reported for transparency at the level of national government

I. Measures based on public order and essential security considerations

a) Investments by established foreign-controlled enterprises

Cross-sectoral

Pursuant to the 2012 National Security Law, which takes a broad definition of national security by encompassing economic security, foreign investment activities can potentially be limited or banned in unidentified areas due to national security considerations. Furthermore, in accordance with the Civil Code and the Law on State Property, discriminatory decision may be taken by the government which may restrict the freedom of owners of strategic objects, defined as a property of social and economic importance, to sell them to locally-established foreign-controlled enterprises.

Authority: Law on National Security No. 527-IV of 6 January 2012, as amended; Civil Code (Article 193-1); and Law on State Property No. 413-IV of 1 March 2011, as amended (Article 188-3).

Agricultural land in border areas

Agricultural land immediately adjacent (3-km zone) to the protected zone of the state border of the Republic of Kazakhstan can only be leased by citizens and legal entities of the Republic of Kazakhstan. Foreigners and foreign legal entities shall not lease or own agricultural land in this zone.

Authority: Land Code dated 20 June 2003 No. 442-II, as amended (Articles 23 and 24).

b) Corporate organisation

None.

c) Government purchasing

None.

d) Official aids and subsidies

None.

II. Other measures reported for transparency

a) Corporate organisation

Cross-sectoral

Foreigners are prohibited to establish as individual entrepreneurs.

Authority: Entrepreneurial Code of the Republic of Kazakhstan No. 375-V of 29 October 2015.

Maritime transport

Under the Shipping Law, cabotage shall be performed by vessels flying the national flag or the flag of another country (Caspian sea country) subject to authorisation by the government.

Authority: Law of the Republic of Kazakhstan No. 284-II “On Merchant Shipping” of 17 January 2002. Law of the Republic of Kazakhstan No. 574-II “On Inland Water Transport” of 6 July 2004.

Banking, insurance and other financial services

Foreign banks and insurance companies as well as foreign companies providing brokerage services are not allowed to open branch offices. They may open a representative office with the permission of the competent authority.

In accordance with the Law No. 422-V ZRK “On amendments and addenda to certain legislative acts of the Republic of Kazakhstan on the issues of non-performing loans and assets of the second-tier banks; on rendering financial services and activities of the financial institutions and the National Bank of the Republic of Kazakhstan” of 24 November 2015 starting from 16 December 2020 non-resident banks, insurance (reinsurance) companies and companies providing brokerage services will be allowed to open a branch in the territory of Republic of Kazakhstan, subject to terms and conditions established by the legislation of the Republic of Kazakhstan taking into account commitments undertaken in the Schedule of specific commitments on trade in services.

Authority: Law of the Republic of Kazakhstan No. 2444 of 31 August 1995 “About banks and banking activity in the Republic of Kazakhstan, as amended; Law of the Republic of Kazakhstan No. 126-II of 18 December 2000 “On insurance activities”, as amended; Law No. 422-V “On amendments and addenda to certain legislative acts of the Republic of Kazakhstan on the issues of non-performing loans and assets of the second-tier banks; on rendering financial services and activities of the financial institutions and the National Bank of the Republic of Kazakhstan” of 24 November 2015.

Banking and insurance

Resident and non-resident legal entities (as well as individuals) may act as founders, or be shareholders of local insurance companies or banks. However, entities registered in certain offshore countries determined by the Government (listed in Resolution No. 145 dated 2 October 2008, as amended), or their individual shareholders cannot be founders or shareholders of a local insurance company or a bank. This restriction does not however apply to insurance companies or banks that have a minimal international credit rating of BBB or equivalent (foreign currency rating, international scale).

Authority: Banking Law No. 2444 adopted on 31 August 1995, as amended (Articles 29 and 17), and Resolution No. 385 of the National Bank of Kazakhstan (24 December 2012), as amended; Law on insurance companies No. 126-II adopted on 18 December 2000, as amended (Articles 33 and 21); Resolution No. 145 dated 2 October 2008 of the Board of Agency of Republic of Kazakhstan on Regulation and Supervision of Financial Market and Financial Organisations ”On approval of the list of offshore zones for the purposes of banking and insurance activities, activities of professional participants of securities market and other licensed types of activities in the securities market, activity of accumulative pension funds and joint stock investment funds”, as amended.

Other finance

Resident and non-resident legal entities (as well as individuals) can set up and be shareholders of companies providing specialised services on financial markets (securities dealing, stock brokerage services, underwriting new issues) and of investment funds, provided they are not controlled by legal entities registered in offshore jurisdictions (as listed in the Government Resolution No. 145). This restriction does not apply to companies that are subsidiaries of non-resident companies that have a minimum long-term credit rating of BBB on foreign currency (as rated by international ratings agencies listed in Resolution No. 385).

Authority: Law on Securities No. 461 adopted on 2 July 2003, Article 47, paragraph 2 and Law on investment funds No. 576-II adopted on 7 July 2004, Article 2 paragraph 8. Resolution No. 385 of the National Bank of Kazakhstan dated 24 December 2012, as amended.

Non-resident asset management companies can offer asset management services for pension funds if they respect minimal financial rating criteria and are not controlled by entities from offshore jurisdictions.

Authority: Law on Pension Provision No.105-V adopted on 21 June 2013, as amended.

b) Key personnel

Cross-sectoral

Limits on employment of foreign staff apply to each employee category. There are four categories for which the permits’ issuance and renewal conditions are defined: executive and their deputies (Category I), managers and specialists (Category II); specialists (Category III); and skilled workers (Category IV):

Foreign staff in the first (executives and their deputies) and second (managers and specialists) categories is limited to 30 %;
Foreign staff in the third (specialists) and fourth (qualified workers) categories is limited to 10%.
In addition, the number of foreign transferees (i.e. foreigners transferred in a Kazakh affiliate of their employer) shall be not more than 50% of the relevant staff category (managers and specialists) in each company (with respect to executives, this limitation does not apply).

Authority: Law of the Republic of Kazakhstan “On Employment” No. 482-V dated 06 April 2016; the Government Decree of the Republic of Kazakhstan of 13 January 2012 No. 45 “Rules and conditions for Hiring Foreign Workers” (as last amended on 31 March 2016); the Law of the Republic of Kazakhstan No. 477-IV “On Migration of Population” of 22 July 2011 (as last amended on 6 April 2016); the Law of the Republic of Kazakhstan No. 2337 “On the Legal Status of Foreigners” of 19 June 1995 (as last amended on 24 November 2015).

Sector-specific

Certain professional activities can be performed by citizens of Kazakhstan only:

Maritime transport

Foreign persons cannot take the position of the captain, chief captain’s mate, chief engineer and signaller of a ship.

Authority: Law of the Republic of Kazakhstan No. 284-II “On Merchant Shipping” of 17 January 2002; Law of the Republic of Kazakhstan No. 574-II “On Inland Water Transport” of 6 July 2004.

Air transportation

Only a citizen of the Republic of Kazakhstan may be the head of the aviation security service of airport or an air company providing scheduled air transport services. Only a citizen of the Republic of Kazakhstan can be the air security officer of an operator providing non-scheduled air services and aerial works.

Authority: Law of the Republic of Kazakhstan No. 339-IV “On Use of Air Space and Air Operations” of 15 July 2010.

Tourism

Only a citizen of the Republic of Kazakhstan can work as a guide (interpreter guide) or tourism instructor.

Authority: Law of the Republic of Kazakhstan No. 211-II “On Tourist Activity in the Republic of Kazakhstan” of 13 June 2001.

Legal and para-legal services

Only a citizen of the Republic of Kazakhstan may be an advocate or a candidate advocate (intern).

Only a citizen of the Republic of Kazakhstan can be a notary or a candidate notary (intern).

Only a citizen of the Republic of Kazakhstan may be a patent attorney.

A public or a private bailiff can only be a citizen of the Republic of Kazakhstan.

Authority: Law of the Republic of Kazakhstan No. 195-I “On Advocacy” of 5 December 1997; Law of the Republic of Kazakhstan No. 155-I “On Notariat” of 14 July 2007; Patent Law of the Republic of Kazakhstan No. 427-I of 16 July 1999; Law of the Republic of Kazakhstan No. 261-IV “On Enforcement Proceedings and Bailiff Status” of 20 April 2010.

Forensic

Only a citizen of the Republic of Kazakhstan can be a forensic expert in forensic enquiry bodies.

Authority: Law of the Republic of Kazakhstan No. 240-IV “On Forensic Examination Activity in the Republic of Kazakhstan” of 20 January 2010.

c) Government purchasing

Government procurement is open to non-resident foreign enterprises and domestic economic operators on equal grounds, provided that the requirement to grant such a regime is set by the international treaties ratified by the Republic of Kazakhstan and pursuant to the terms and conditions set forth in such treaties. Currently Kazakhstan provides national treatment for the purposes of participation in public procurements only for the Member-States of the Eurasian Economic Union (Armenia, Belarus, Kyrgyzstan and Russia) under the Treaty on Eurasian Economic Union of 29 May 2014 on a reciprocity basis.

Authority: Law “On Public Procurement” N° 434-V of 4 December 2015 (subparagraph 31 of Article 2, and Article 14).

d) Official aids and subsidies

None.

B. Measures reported for transparency by territorial subdivisions

None.

C. Monopolies and concessions

At the national level

I. Public monopolies

Maintaining State land cadastre of the Republic of Kazakhstan;
Forestry, connected with inventory of forest resources and territorial set up of the forest fund;
Conducting meteorological and hydrological monitoring and monitoring the condition of the environment;
Expertise of pharmaceutical products, medical devices and of medical equipment;
Evaluation of safety and quality of pharmaceutical products, medical devices registered in the Republic of Kazakhstan;
Registration of the pledge on movable property, not subject to mandatory State registration;
Determination of the cost of taxation objects (housing, country cottage building, object of unfinished construction, unheated extension, household (service) building, basement level, cellar of the housing, garage);
State technical inspection of buildings, constructions, and (or) their components;
Localization and liquidation of epicentres of dissemination of quarantine objects;
In the field of protection of selective achievements accepting and conducting preliminary expertise of applications for selective achievements;
In the field of protection of inventions, utility models, industrial design acceptance and expertise of applications for inventions, utility models and industrial designs;
In the field of protection of trademarks, service marks, appellations of origin acceptance and expertise of applications for registration of trademarks, service marks, and appellations of origin;
Conducting comprehensive outsourced expertise of construction drafts (of technical and economic justifications and of design-and-estimate documentation);
Maintaining State city-planning cadastre;
In the field of veterinary diagnostics of extremely hazardous and enzootic animal diseases;
In the field of electronic document and electronic digital signature activity of the trusted third party of the Republic of Kazakhstan on conducting verification of authenticity of the foreign electronic digital signature, activity of the national validating centre;
In the field of communications technical support of works on monitoring of radio-frequency spectrum and radio-electronic tools;
In the field of informational development attestation inspection of informational system, informational-communication platform of “electronic government” and internet resource of the State body on their compliance with requirements of informational security;
In the field of mandatory social insurance personified recording and formation of centralized data base of mandatory social expenditures and social payments of participants of the system pf mandatory social insurance; organisation of social payments from the State fund of social insurance;
In the field of State statistics collection, processing of the primary statistical data, their storage in electronic format; formation, support and actualization of informational-statistical systems, databases and their platforms, registries of statistics, internet-resource of the authorized body;
Preparation of identity documents, accumulation and maintenance of the integrated data pool of the system of document preparation, automatization of the work on recording of migration processes, elaboration, implementation and support of software-technical products for internal affairs bodies;
Withdrawal of sturgeon species from natural habitat, their purchase, processing, and export of their roe and of other types of products;
Organizing methodological and scientific-methodological support of the education system and educational process (State mandatory public standards of education, curriculums, education programs);
Organizing expertise of textbooks, educational-methodical kits and handbooks by levels of education.

Authority:

- Land Code of the Republic of Kazakhstan No. 442 of 20 June 2003
- Forest Code of the Republic of Kazakhstan No. 447 of 8 July 2003
- Environmental Code No. 212 of 9 January 2007
- Code of the Republic of Kazakhstan «On Public Health and the System of Healthcare» No. 193-IV of 18 September 2009
- Law of the Republic of Kazakhstan «On Registration of The Pledge on Movable Property» No. 254 of 30 June 1998
- Law of the Republic of Kazakhstan «On Valuating Activity in the Republic of Kazakhstan» No. 109 of 30 November 2000
- Law of the Republic of Kazakhstan «On State Registration of Rights for Immovable Property» No. 310 of 26 July 2007
- Law of the Republic of Kazakhstan «On Quarantine of Plants» No. 344 of 11 February 1999
- Law of the Republic of Kazakhstan «On Protection of Selective Achievements» No. 422-I of 13 July 1999
- Law of the Republic of Kazakhstan «Patent Law of the Republic of Kazakhstan» No. 427 of 16 July 1999
- Law of the Republic of Kazakhstan «On Trade Marks, Service Marks, and Appellations of Origin» No. 456 of 26 July 1999
- Law of the Republic of Kazakhstan «On Architectural, City Planning and Construction Activity in the Republic of Kazakhstan» No. 242 of 16 July 2001
- Law of the Republic of Kazakhstan «On Veterinary» No. 339 of 10 July 2002
- Law of the Republic of Kazakhstan «On Electronic Document and Electronic Digital Signature» of 7 January 2003 No. 370
- Law of the Republic of Kazakhstan «Оn Communications» No. 567 of 5 July 2004
- Law of the Republic of Kazakhstan «On Informational Development» No. 418-V of 24 November 2015
- Law of the Republic of Kazakhstan «On Mandatory Social Insurance» No. 405 of 25 April 2003
- Law of the Republic of Kazakhstan «On State Statistics» No. 257-IV of 19 March 2010
- Law of the Republic of Kazakhstan «On Identity Documents» No. 73-V of 29 January 2013
- Law of the Republic of Kazakhstan «On Protection, Reproduction, and Use of Animal World» No. 593 of 9 July 2004
- Law of the Republic of Kazakhstan “On Education” No. 319-III of 27 July 2007.

II. Natural monopolies

Transportation of oil and/or oil products via mainline pipelines, except in the cases of their transportation for the purposes of transit through Kazakhstan and export out of Kazakhstan;
Storage, transportation of commercial gas via connecting, main line gas pipelines and /or gas distribution facilities, exploitation of group reservoir units, and transportation of crude gas via connecting pipelines, , except in the cases of storage, transportation of commercial gas with the aim of transit through Kazakhstan and export out of Kazakhstan;
Electric power transmission and/or distribution;
Thermal energy production, transmission, distribution and/or supply, except for thermal energy generated with the use of soil heat, from underground water, rivers, water reservoirs, discharge water of industrial enterprises and power stations, and from sewers;
Technical dispatching of electric power grid output and consumption;
management of the balancing of electric power grid;
Mainline railway networks, except for mainline railway network services in transportation of goods in containers and transportation of empty containers;
Railway track services with the objects of railway transport under concession agreements in the absence of alternative railway track;
Approach track services in the absence of alternative approach track ;
Air navigation;
Ports, airports;
Provision or lease of underground cable systems and other fixed assets related to connection of telecommunication networks to the public telecommunication networks;
Universal postal services;
Water-utilisation and/or sewer systems;

Authority: Article 4, Law No. 272 “On Natural Monopolies and regulated markets” (9 June 1998), as amended. The Law also refers to Order No. 186 of the Minister of Economy (30 December 2014), which provides a detailed list of natural monopolies.

III. Private monopolies

None.

IV. Concessions

Exploration and exploitation of oil and gas negotiated by Subsurface users with the Government (must comply with the provisions of the Subsurface Law).

Authority: Subsurface exploration and exploitation contracts are regulated by the 2010 Subsurface Law (Law No. 291-IV adopted on 24 June 2010), as amended. See Articles 61 to 74 on Subsurface users’ contracts.

Infrastructure facilities in all economic sectors can be the object of a concession agreement, except for trunk rail networks, navigable waterways, lighthouses and other navigation devices & signs, and water structures (dams, hydroelectric and other hydraulic structures). Kazakhstan allows the concession of water management facilities (water intake facilities, pumping stations, water treatment facilities) of most large cities.

Authority: Law on Concessions (No. 167-III) adopted on 7 July 2006 (Article 4), as amended, and corresponding list of objects which cannot be transferred into concession (Decree of the President No. 294 adopted on 5 March 2007).

At the level of territorial subdivisions

None.