Kazakhstan Law News Digest for August - September 2022

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Key Kazakhstan legal developments and clarifications from the state authorities, case law news and legal publications have been discussed by our team.

I.    Legislative News

Environment

  • The Ministry of Ecology, Geology and Natural Resources has approved the Rules for the Formation of the Liquidation Fund of the Waste Dump. Such a liquidation fund is required to ensure the reclamation of lands after closure of the waste dump. The liquidation fund is formed by the waste dump's operator (the owner of the waste dump) through crediting annual contributions to a special escrow account in the second-tier banks in the territory of the Republic of Kazakhstan.  
  • The Government has approved the rules and order to recognize manufacturing technology as “green”. The classification of the technology to “green” is accomplished based on the application of individuals and legal entities. It is worth mentioning that the status of “green” technologies provides an opportunity to attract “green” investments to projects, including through government grants, investments of national development institutions and funds of local treasuries.

Monopoly

  • The Ministry of Industry and Infrastructural Development has introduced a number of amendments/supplements to the Rules of Activities of Natural Monopoly Entities. In particular, significant terminological and procedural changes were made in the procurement procedure of natural monopoly entities, including in the list of tender documentation. It should be also noted that the period of consideration of the application for inclusion in the register of natural monopoly entities has decreased from 30 to 15 calendar days. Moreover, the procedures for (1) inclusion in the register, (2) exclusion from the register, and (3) obtaining various consent of the authorized body in the natural monopolies sector (The Committee on the Regulation of Natural Monopolies of the Ministry of National Economy) can now be carried out both in paper and electronic format through the website.
  • The Competition Authority has amended the rules to impose temporary government price regulations on specific commodity markets. In particular, the rule establishing the term for introduction of such price regulation, which was not more than 180 calendar days in one year, was excluded. Now, we assume that such a term will be determined by the Competition Authority in each individual case, when introducing temporary price regulation in commodity markets.

Licensing

  • The Competition Authority has clarified the procedure of appeal against the actions of the service provider when issuing a license to engage in the activity of commodity exchanges. In particular, a complaint may now be filed with (1) a higher administrative body, (2) the Civil Service Agency or (3) a head of the service provider not later than 3 months from the day when the service recipient became aware of the adoption of an administrative act within the framework of the provision of civil service.

Renewable Energy Sources (RES)

  • The Government has changed the rules for indexing auction tariff for the purchase of electricity produced through the RES facility by the Financial Settlement Center (FSC). Now, aside from annual indexation of auction tariff for the period of electricity sale and purchase, auction tariff is subject to one-time indexation for the period of construction. The calculation of such one-time auction tariff indexation will cover the period from the date of publication of the auction winners' register and between the start of the electricity sale and purchase. The actual recalculation will be carried out within 30 calendar days from the date of releasing the electricity to the grid. It is noteworthy that the new rules for indexing the auction tariff will apply only to those power plants that will execute sale and purchase contracts with the FSC after this rule comes into effect. In general, this new rule is quite positive, and especially in the case of extension of the time schedule of construction works.
  •  The Government has changed the amount of the fixed tariff for the purchase of electricity produced by hydro power plants using water hydrodynamic energy – KZT 41,23 per kWh (excluding VAT). 

Procurement

  •  The Government has approved a list of goods, works, services, on which division into lots by their uniform types and at the place of their delivery is not required. According to the list, it includes, inter alia, office supplies, construction materials and building maintenance services. It should be recalled that under the rules of public procurement, the customer in public procurement procedures is required to divide goods, works, services into lots according to their uniform types and the place of their delivery (execution, rendering), save for certain goods, works and services, the list of which is approved by the Government.  
  • The Ministry of Finance has changed the threshold for dumping prices. If the price was previously recognized as dumping if it is lower than the price allocated for tender by more than 50%, and now this figure is 20%, except for some works and services. For example, development of project documentation and feasibility studies of construction projects. For these cases, the threshold for determining the dumping price remains the same. 

Land Relations

  • The Ministry of Agriculture has approved the Methodology for Land Monitoring. This land monitoring is carried out on agricultural land and is primarily necessary for the formation of data and subsequent maintenance of the state land cadastre. 

Valuation Activities

In particular, changes have been made to the methods of the valuation as well as to the sequence of actions within valuation process.

Labor Relations

  • The Ministry of Labor and Social Protection of Population has changed the Order of classification of activities into category of professional risk. It should be recalled that the amount of insurance premium paid by the employer under the contract of compulsory insurance of employees against accidents in a workspace depends on this professional risk categories. In particular, there has been a shift in activities between these professional risk categories. For example, if a coal production was previously classified as a 22 category professional risk, it is now classified as a 12 category, which leads to a reduction in the rate of insurance premiums payable.  

Financial System

  • The National Bank has amended the Rules for the classification of financial organizations as systemically important. From now on, the National Bank will form a list of systemically important financial organizations based on the data as of 1 October. It should be recalled that the development of such a list of systemically important financial organizations is a key measure aimed at reducing systemic risks of the financial system as a whole. The new changes also clarify the procedure for amending the approved list of systemically important financial organizations. 
  • The President has adopted the Decree, which significantly expands the functions and authority of the Agency for Regulation and Development of Financial Market (ARDFM). In particular, ARDFM is now entitled to conduct audits and other forms of control and supervision involving appraisers and specialists in the field of financial technology.

Banking Activities

  • The Law requiring banks to sell the collateral property by auction sale within 3 years from the date of obtaining the ownership over this collateral property, which was a security under a loan agreement has come into force. 
  • The Law restricting banks from assigning their rights under a loan agreement (secured by a pledge) in favour of third parties without a valuation of the collateral property carried out by an appraiser within the last 6 months prior to the assignment of the rights has come into force. 

Securities Market

  • The Agency for Regulation and Development of Financial Market has introduced a number of amendments and additions to the regulatory framework on securities market development (effective from 30 September 2022). In particular:

i. for membership on the stock exchange of the Republic of Kazakhstan - participants of the Astana International Financial Center must have licenses for conducting brokerage and (or) dealer services issued by the Committee of Astana International Financial Center on Regulation of Financial Services;

ii. the list of financial instruments permitted for acquisition only by qualified investors has been expanded. Now the list includes (1) private placement bonds, (2) non-maturity bonds, and (3) investment bonds. 

Trading Activities

  • The Ministry of Energy has approved a maximum price of Аi-80, Аi-92 and Аi-93 gasoline, and summer and off-season diesel fuel at their retail sale through stationary gas stations. The temporary government price regulation will remain in effect until 9 January 2023.
  • The Ministry of Industry and Infrastructural Development has imposed a ban on the export of hard coal from the territory of the Republic of Kazakhstan by road (code 2701 of the commodity nomenclature of foreign economic activity of the Eurasian Economic Union). The ban will remain in effect until 30 March 2023.

Astana Hub International Technology Park

  • The Ministry of Digital Development, Innovation and Aerospace Industry has introduced a number of amendments to the rules of activity of Astana Hub International Technology Park (Astana Hub). In particular, the list of functions of Astana Hub has been expanded, as well as changes in the procedure and terms of registration of legal entities as participants of the Astana Hub have been introduced.

Informatisation

  • The Ministry of Information and Public Development has approved the Rules for the Registry of Legal Representatives of Foreign Online Platforms and/or Instant Messaging Services. The main task of maintaining such a register is to account legal representatives who will have to interact with the Ministry of Information and Public Development in terms of restricting (deleting) of content on online platforms and instant messaging services, which is prohibited or otherwise restricted to distribution by the court acts or laws of the Republic of Kazakhstan. Under this Rules, any of the following may be legal representatives:
    • citizens of the Republic of Kazakhstan;
    • legal entities established in the Republic of Kazakhstan;
    • individual entrepreneurs;
    • foreign organizations; and
    • foreign nationals and stateless persons.
  • The Ministry of Information and Public Development has approved the rules for creating an expert group to review a statement on the facts of cyberbullying against a child. In case of detection of facts of cyberbullying against a child, a legal representative of a child is permitted to file an application to the expert group created by the Ministry of Information and Public Development. Recall that cyberbullying against a child is systematic (two or more times) acts of a humiliating nature, harassment and/or intimidation, including those aimed at forcing or refusing to commit an act committed using the media and/or telecommunications networks.

Digital Assets Regulation

  • On 20 September 2022, the Mazhilis of the Parliament has initiated a draft law “On digital assets in the Republic of Kazakhstan”. It is proposed that the law will regulate the relationships arising during the issuance, placement and circulation of digital assets, as well as the peculiarities of regulating the activities of digital asset market entities. 
  • The Mazhilis of the Parliament is considering a draft law amending the Constitutional Law “On Astana International Financial Center”. In general, the proposed amendments and additions are aimed at implementing and settling the digital asset management system at the Astana International Financial Center (AIFC). For example, lawmakers propose to include into this Constitutional Law a number of digital terminology: digital mining, digital asset exchange, miner, mining pool and much more. Based on the text of the draft law, we understand that the licensing procedure and the requirements for the AIFC participants will be separately approved under the AIFC acts.

II.    Clarifications from the State Authorities

  • Response of the Minister of Labor and Social Protection of Population dated 31 August 2022 – “On the labor compensation when the night work falls on the holidays or weekends”.
  • Response of the Minister of Finance dated 7 September 2022 – “Purchase of services on rent of building”.
  • Response of the Minister of Justice dated 8 September 2022 – “To the question on the model charter of LLP”.
  • Response of the Chairman of the Committee of State Revenues of the Ministry of Finance dated 19 September 2022 – “On appropriation of the IIN/BIN to individuals and legal entities which are non-residents and registration as a taxpayer in the sale of a share to individuals and legal entities which are non-residents”. 
  • Response of the Chairman of the Committee of State Revenues of the Ministry of Finance dated 19 September 2022 – “On tax obligations of LLP (VAT payer) under CIT and VAT under the agency agreement concluded with a non-resident of the Republic of Kazakhstan (Afghanistan) to find clients for sale of goods”.

III.    Case Law News 

  • On 5 August 2022, the Supreme Court has published the issue of Bulletin No. 7/2022, containing, inter alia, the extraction from certain rulings of the judicial panel on administrative and civil affairs of the Supreme Court of the Republic of Kazakhstan. 
  • On 16 August 2022, the Supreme Court has published the issue of Bulletin No. 8/2022, containing, inter alia, the extraction from certain rulings of the judicial panel on administrative and civil affairs of the Supreme Court of the Republic of Kazakhstan.

IV.    Legal Publications

Zakon.kz / Analytics

Sud.gov.kz / Press Center

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