The International Technological Park “Astana Hub”—created in Kazakhstan in 2018—aims to create an environment for the implementation of industrial and innovative activities in the information technology sphere. This Insight focuses on key issues related to the Astana Hub and its participants from the Kazakhstan legal perspective.
General Framework
According to Astana Hub’s website, there are more than 200 projects created in Astana Hub. From an organizational perspective, Astana Hub is a legal entity called Corporate Fund International Hub for IT Startups “Astana Hub,” whose sole shareholder is joint stock company Zerde National Infocommunication Holding. The sole shareholder of Zerde, in turn, is the State Property and Privatization Committee of the Ministry of Finance of the Republic of Kazakhstan. From the legal perspective, Astana Hub is a special legal regime envisaging certain privileges, as discussed further below.
Who Can Join?
To be eligible for the privileges envisaged for Astana Hub, companies need to meet certain criteria and become participants through the submission of an online application. If approved, they will be issued a certificate of participation.
Participants can only be legal entities (either Kazakh or non-Kazakh) whose projects correspond to one of Astana Hub’s priorities (e.g., software development, design, elaboration and implementation of IT systems, and others). The law sets out certain limitations; for example, a participant cannot be a subsoil user or a special economic zone entity. Participants pay fees and duties pursuant to an agreement with Astana Hub.
What Are the Privileges?
Astana Hub participants are eligible for the following benefits, exemptions, and privileges:
- Work permits for managers and specialists with higher education:
- No quotas.
- No work permit requirements.
- Visas for foreigners:
- Term=up to five years.
- Visa can be obtained in a Kazakhstan embassy in a given country or at entry to an international airport in Kazakhstan.
- Visa extension can be done without leaving Kazakhstan.
- Taxes (exemptions apply until 1 January 2029):
- Astana Hub participants do not pay corporate income tax (the so-called mechanism of decrease of the corporate income tax by 100% applies in relation to priority types of activities in the IT sphere).
- In general, dividends at the Kazakhstan level are tax exempt (both at source and received dividends). For instance, if one Kazakhstan legal entity pays dividends to another Kazakhstan legal entity, then the receiving entity adjusts its aggregate annual income by the amount of the dividends received (the dividends are also not taxed at the source of payment in relation to residents). This rule also applies in relation to Astana Hub participants, notwithstanding the fact that there is a limitation for entities decreasing corporate income tax by 100%.
- In general, dividends paid to non-residents are exempt from Kazakhstan tax after three years of ownership of shares (with few exceptions). This rule also applies to non-residents owning shares in Astana Hub’s participants, notwithstanding the fact that there is a limitation for entities decreasing corporate income tax by 100%.
- Dividends paid by an Astana Hub participant to a non-resident shareholder are taxed at 5% (the standard tax rate is 15%).
- Capital gains tax when selling shares in an Astana Hub participant is exempt from tax for resident sellers.
- Capital gains tax when selling shares in an Astana Hub participant is subject to 5% tax for non-resident sellers (the standard tax rate is 15%).
- The following types of income are not considered as Kazakhstan-source income: (1) Income from consulting, marketing, and engineering services; services related to IT security; and works related to creation of data processing centers if such income is paid by an Astana Hub participant (unless the recipient is a tax offshore entity); and (2) Royalties paid by an Astana Hub participant (unless the recipient is a tax offshore entity) (this provision is effective until 1 January 2024).
- Astana Hub employee income is excluded from individual income tax (most probably, this only applies to employees who are Kazakhstan residents).
- There are certain additional tax benefits, including certain tax exemptions in respect of social tax, value-added tax (VAT), and the so-called reverse charge VAT.
Contacts
If you have any questions or would like more information on the issues discussed in this Insight, please contact any of the following Morgan Lewis lawyers:
Almaty
Aset Shyngyssov
Bakhytzhan Kadyrov