Investment subsidies examples (the realization of investment projects in the priority sectors in Kazakhstan).

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26 November 2015 Corporate lawInvestments

Investment subsidies examples (the realization of investment projects in the priority sectors in Kazakhstan). 

Situation №1.

Organization carrying out the activity included to the list of priority types of activities identified for the realization of investment projects made an application to the Kazakhstani authorized body on investments and the documents necessary for obtaining investment subsidy. Organization invests to the construction of production departments and the equipment.

How investment subsidy is provided for construction / installation works and obtaining the equipment?

Analysis of the Situation

Resolution of the Republic of Kazakhstan of November 4, 2014 №1175 approves the Rules of Provision of Investment Subsidy (hereinafter referred to as “The Rules”). Paragraph 2 of the Rules identifies a term “investment subsidy” as a type of budget subsidy provided as investment preference on free and irrevocable basis to a legal entity of the Republic of Kazakhstan concluding an investment contract on the realization of investment priority project.

Rules provide that after the application to the authorized authority on investments (state body identified by the Government of the Republic of Kazakhstan on the conclusion of investment contracts and control on their execution), during 10 days authorized body check the conformity of the organization to the condition of the provision of investment subsidy as well as analyses documents on the investment project.

If the organization and its documents on investment project correspond to the requirements authorized body prepares and makes for the Government of the Republic of Kazakhstan a project of the Government Resolution on the provision of investment subsidy. In case of the positive decision by the Government on the provision of investment preference and official publication of this decision, authorized body prepares an investment contract for signing. Investment contract should be registered by the authorized body during 5 working days and come into force on the date of its registration.

According to the Rules investment subsidy for the construction / installation works and acquisition of the equipment is provided by way of reimbursement of up to 30 per cent of the expenditure (without the value added tax and excise duties) on the basis of the confirming documents not exceeding the costs of expenditure provided in the pre-project documentation with the conclusion of the state expertise. Limit of the investment subsidy is defined by the joint order of the authorized bodies on the investment and the development, budget planning and national economy of the Republic of Kazakhstan in the scope of republican budged for the respective financial year according to the budget legislation of the Republic of Kazakhstan (para. 13 of the Rules).

Payment of the investment subsidy is made after the putting production into operation to the full extent defined by the investment contract based on the year-end results on condition of the fulfilling by the investor of the obligations on the loading production (para. 14 of the Rules).

In the scope of investment contract a schedule and yearly volumes of the payment of investment subsidy are defined by way of allocation of investment subsidy by the equal parts for a period depending on the volume of investments and profitability of the investment priority project during three years after putting production into operation and until the termination of the investment contract (para. 15 of the Rules).

Situation №2

Organization obtained investment subsidy for the realization of investment contract terminate a working program. After the termination of the realization of a working program organization should provide to the authorized authority an audit report.

What kind of information should contain an audit report?

Analysis of the Situation

According to the para. 16 of the Rules of the Provision of Investment Subsidy approved by the Resolution of the Government of the Republic of Kazakhstan of November 4, 2014 №1175 after the termination of the realization of a working program investor (organization) provide to the authorized body an audit report which should contain following information:

  1. On the execution of investment obligation according to a working program in investment contract;
  2. Explanation with regard to the fixed assets obtained according to a working program;
  3. Summary register of the documents proving execution of a working program;
  4. Data on the execution of the conditions of investment contract.

Situation №3

The investor company with already obtained investment preference for the realization of investment project have exceeded planned volume of the yearly indicator of the production workload provided in the aforementioned contract.
May this investor company in this case seek for the raise of the sum of reimbursement paid in the scope of investment preference, if yes, what reimbursement?

Analysis of the Situation

Investor company with already obtained investment preference for the realization of investment contract and exceeded the planned volume of the yearly indicator of the production work load provided in the aforementioned contract may seek for the rise of the sum of reimbursement paid in the scope of the investment preference.

According to the para. 17 of the Rules of Provision of Investment Subsidy approved by the resolution of the Government of the Republic of Kazakhstan of November 4, 2014 №1175 in case when an investor have exceeded planned yearly indicator on the production work load provided in the investment contract, investor is subject for a payment of the subsidy in the scope identified in the investment contract. In this case payment of investment subsidy (F) is calculated according to the following formula:

 Real volume of the production turnout and %
F = Sum planned for reimbursement х----------------------------------------------------------------
 Planned volume of the production turnout and %

In this case, with regard to the real volume of production turnout investor is obliged to provide documents confirming realization of the production and(or) yearly data according to the form approved by the authorized body of the Republic of Kazakhstan on Statistics.


Published in the Magazine “Large and Medium Business” №3, 2015

Prepared by Ospanova Gulnar, partner of the Legal Consulting Company “Artyushenko and Partners”, Almaty

Published via our website 21.04.2015