Kazakhstan Introduces Special Legal Regime for Alatau City

The President of Kazakhstan has signed a Constitutional Law introducing a special legal regime for Alatau city.

The law establishes Alatau as a "city of accelerated development" that is designed as a next‑generation smart city, innovation, and investment hub, with a legal framework that gives investors regulatory stability, tax incentives, digital governance, and enhanced protections exceeding the standard regime in Kazakhstan (Alatau Regime). The Constitutional Law stands high in the hierarchy of laws and prevails over other laws, except for international treaties ratified by Kazakhstan.

GOVERNANCE STRUCTURE AND LEGAL FRAMEWORK

Alatau is governed through a distinct system of public administration:

• The Council of the City of Alatau (supreme body)—chaired by the prime minister of Kazakhstan—approves strategy, budgets, and key regulations, and appoints the akim and chief executive officer of the Administration of Alatau.
• The Administration of Alatau is a special non profit public management organization responsible for strategy, regulation, licensing, supervision, and development of the city.
• The akimat (executive body) manages municipal public services, infrastructure, education and healthcare.

Regulatory acts of Alatau have special legal force, prevail over conflicting national acts (including the Tax Code), and may rely on English and Welsh law principles and international best practices, subject to constitutional limits.

ACCESS TO THE ALATAU REGIME

Participation in the Alatau Regime is based on obtaining the status of a "resident of Alatau," under defined categories as per the license, which may be granted to both legal entities and individuals.

Existing investment contracts developed on the territory of Alatau City and participants of the Alatau Special Economic Zone (SEZ) are preserved during the transition and may continue operating under protected conditions, with their rights and incentives carried over into the Alatau Regime, provided that the relevant entities complete mandatory licensing and re registration as an Alatau resident during the transition period from 1 January to 1 July 2027. While the Constitutional Law expressly preserves the validity of existing investment contracts in the part not conflicting with the Alatau City legal framework, a case-by-case assessment is recommended to assess the alignment of the relevant protections and incentives with the Alatau City legal framework.

The law provides for a single window, fully digital system for registration, licensing, approvals, and supervision. The law also permits recognition of foreign licenses and accreditations from high quality jurisdictions.

INVESTMENT FRAMEWORK

Investment projects should generally be implemented through Alatau residents and within priority sectors designated by the city authorities.

The law establishes a stability framework under which previously granted licenses and approved activities remain valid despite subsequent legislative changes. Adverse changes may only apply in limited circumstances and generally require a transition period and a specific administrative decision.

The regime provides for the possibility of tax incentives, including reduced tax rates, exemptions and other preferential treatment, subject to conditions established by the city authorities.

The law also expressly defines "investment disputes," including disputes between investors and the state or administrative bodies, which may arise in connection with the implementation of investment projects, and introduces a dedicated dispute resolution framework that includes, inter alia, the court of the Astana International Financial Centre.

TAX AND FINANCIAL INCENTIVES

The Alatau Regime introduces a flexible, project-based tax incentive framework, with preferences granted on a case-by-case basis and typically embedded in the relevant business license.

Tax incentives may include reductions, exemptions, or adjustments to the tax base and may apply, inter alia, to corporate income tax (including withholding tax on dividends, interest and royalties), value-added tax, property tax, land tax and certain employment-related taxes.

The total amount of tax benefits is generally capped at 10% of the investment project value, unless otherwise approved at the presidential level.

Tax incentives may be granted for a period of up to 30 years, providing long-term visibility for investors.

In addition, qualifying investment projects benefit from a tax regime stability guarantee for 10 years from the date of issuance of the business license, protecting against the introduction of new taxes, increases in tax rates, or adverse changes in tax calculation methodologies.

Tax incentives are not available where activities are artificially relocated to Alatau or structured through related parties to reduce tax liabilities elsewhere in Kazakhstan.

CONCLUSION

The Alatau Regime establishes a comprehensive and highly structured investment framework offering a city‑wide, constitutionally anchored platform designed for long‑term, capital‑intensive projects. By combining regulatory autonomy and stability, project-based incentives, flexible dispute resolution mechanisms and centralized administration, Alatau positions itself as an attractive alternative to both traditional SEZs and the finance focused AIFC. It remains to be seen how the Alatau Regime will develop once the full regulatory framework is in place.