Kazakhstan

Ease of Doing Business Rank: 35

Overview

 

Geographic location

The Republic of Kazakhstan is the world’s largest landlocked country and a former Soviet Republic. Most of the country lies in Central Asia with some parts in Western Europe.

Russia lies to the north, Mongolia and China to the east, Kyrgyzstan, Uzbekistan and Turkmenistan to the south and part of Russia and the Caspian Sea to the west.

Spoken language

Kazakh is the national and state language of Kazakhstan. However, Russian is the official language of the nation. Both Kazakh and Russian are recognized equally by the government.

Most Kazakhstani peoples speak Kazakh (64.4%), but approximately 95% of the country’s population is also fluent in Russian.

Minority languages include Ukrainian, German, Uyghur, Tatar, Uzbek, Tajiki and Turkish. English is often used in business, large cities and the tourism industry.

Population

The 2019 population estimate is 18.59 million.
Almaty is the largest city with over 1.85 million inhabitants. Nur-Sultan and Shmykent also have populations over 1,000,000. Numerous other cities throughout the country have populations under 500,000.

Popular industries

The top industries in Kazakhstan revolve around oil and gas production and mining minerals including uranium, chromite, lead, copper, coal, gold, zinc, wolfram and iron.
Kazakhstan also has a strong service industry, primarily related to tourism, retail investment and ICT. Agriculture plays a small role and the primary export is wheat.

Education

The Times Higher Education World Rankings ranks one Kazakhstani university in the top 1,000 in the world.

The Legatum Prosperity Index ranks Kazakhstani’s education system 25th out of 149.

Popular entity types

The most common type of business entities in Kazakhstan are limited liability partnership and joint stock company.
The limited liability partnership is the most commonly used for foreign business.

Kazakhstan incentives for business

Kazakhstan has introduced new legislation and incentives to attract foreign business. For instance, residents of France, Germany, Italy, Japan, Korea, Malaysia, the Netherlands, the United Arab Emirates, the United Kingdom and the United States considering investment in Kazakhstan can stay without a visa for 15 days.

Legislation includes the establishment of a special tax regime for entities implementing priority investment projects. This includes provisions to shield them against future tax, duty and rate changes.

Additionally, priority investment projects enjoy a tax holiday for 10 years once they’ve signed an investment contract. Qualifying industries are usually within the infrastructure or business sector.

Other incentives include state in-kind grants, no work permits for foreign labor and a 30 percent cashback on investments in some instances.

History & Features

 

Main cities for business

Almaty, Aktau and Aktobe are popular areas for foreign business due to their streamlined processes for permits, infrastructure and property.

However, the country includes many other business regions including Nur-Sultan, the capital, and the major center of Shymkent.

Popular historical & tourist attractions

Since Kazakhstan was formerly part of the Soviet Republic, most people don’t realize it is a country packed with stunning natural landscapes and architectural and historical wonders.

The Eurasian Steppe covers most of Kazakhstan with its seemingly endless miles of flat grasslands. However, many interesting features punctuate the landscape.

For instance, the Singing Dunes in Altyn Emel National Park span 4,600 square kilometers and whistles loudly as the wind skims across its sandy surfaces. The contrasting Charyn Canyon near the Chinese border features steep cliffs, amazing color gradations, and opportunities to hike, whitewater raft or canoe.

Kazakhstan also has 5 UNESCO World Heritage Sites, including the historic network of Silk Road routes that passed through the area. The Chang’an-Tianshan Corridor built between the 2nd century BC and 1st century AD, remained a principle route until the 16th century. It linked capital cities, palaces and civilizations through trade.

The medieval mausoleum of Khoja Ahmed Yasawi in Turkestan is one of the best examples of Timurid architecture in the world. Built between 1389 and 1405, it showcases the ingenuity and experimentation used by Persian builders of the time.

Poor Soviet irrigation planning during the 20th century led to the near disappearance of the once vast Aral Sea. In the sixties, it was one of the four largest lakes in the world. Today, abandoned ships sit in the sand miles away from water, reminding visitors of the impact of actions on the environment.

No visit to Kazakhstan would be complete with a visit to the largest and former capital city of Almaty. It is the center of commerce and includes the stock exchange and major banks. The “city of apple trees” also includes plenty of historic and contemporary marvels, museums, an entertainment park and a zoo.

History

Originally Turkic tribes inhabited the region, but were conquered by the Mongols in the 13th century and became territories of the Kazakh Khanate.

When the Kazakh Khanate weakened in the 1700s, the area was colonized by the Russian Empire. However, Turk and Muslim peoples longed for independence. The Kazakh intelligentsia grew in resistance to the Russification of all spheres of social life and Russian colonization was slowed by rebellions and wars.

In 1917, the Kazakhs rebelled against Russian domination and attempted to set up an independent national government. However, they surrendered to Bolshevik authorities after the Bolshevik Revolution.

By 1920, the region was divided into two ethnically distinct republics, but under the control of the Red Army.

Between 1929 and 1934, Joseph Stalin’s attempts to collectivize agriculture led to mass famines and the deaths of 38% of all Kazakhs.

In 1936, the Kazakh Autonomous Socialist Soviet Republic became the Kazakh Soviet Socialist Republic. Between 1938 and1953 Russia tightened its hold on the area and mass repression and arrests occurred. Many Soviet citizens immigrated to the area and the Russian government used it to imprison potential allies of the Germans during the war.

Settlement continued in the late 1960s and 1970s as the Soviet government enticed workers to relocate closer to the area’s coal, gas and oil deposits. By the end of the decade, the Kazakh population was the minority.

As Russian power diminished, unrest grew. Demonstrations were met with violence, but the government remained committed to the Soviet Union. After the Soviet coup d’état attempt against Gorbachev in 1991, Kazakhstan retained the governmental structure, most of its leadership, and elected a president.

Kazakhstan declared its independence from the Soviet Union that year and the country moved towards a private economy. In 1996, Kazakhstan signed an economic cooperation pact with Russia.

Today, Kazakhstan is a republic under authoritarian presidential rule. It has the largest market economy in Central Asia.

Other relevant facts

The majority of Kazakhstani practice Islam (70.2%), followed by Christianity (26.3%). A small portion of population does not affiliate with a religion or practices another faith.

Many Kazakhstani identify as Kazakhs (63.6%). These people may be of mixed ethnicity. Russians make up 23.7% of the population, Uzbeks 2.9%, Ukrainians 2.1%, Uygur 1.4%, Tatars 1.3%, Germans 1.1%, and others constitute the remaining 3.9%.

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Kazakhstan is the 65th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates Kazakhstan 59th globally and states, “Kazakhstan has a growing labor force and considerable development potential, but the poor business environment, weak competition in some sectors, and long distances to global markets remain significant constraints.”

World Bank’s “Doing Business” rankings rate Kazakhstan 28th for ease of doing business in the world.

Kazakhstan Entity Support Services by Blueback Global

Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

The common scenarios that may give rise to the need for Blueback Global’s services include the following:

With our integrated approach, you can expect the following experience:

We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Kazakhstan. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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