Monthly Archives: September 2014

  • Getting to grips with Kazakhstan Withholding Tax

    Posted 29/09/2014

    In the first edition of our Kazakhstan Tax Series, we set out some tax tips for companies who have already registered a business or a branch of their business in Kazakhstan. Getting to grips with tax issues in a foreign country involves careful preparation to make sure your business does not, in the worst case scenario, fall foul of the relevant rules and regulations. Best case scenario is that you are up to date, fully aware and in a position to take advantage of all available tax breaks. Ideally, such work needs to be done well in advance to ensure that your company gets it right from the outset. In this edition, the focus is on with-holding tax (WHT) and non-resident VAT.

    Tax minimisation

    Top Tips on WHT and non-resident VAT

    It is essential that you properly account for tax on overseas supplier invoices. Typically these taxes will be with-holding tax and non-resident VAT.


    There are good operational reasons for doing so.

    Let’s imagine that one of your Kazakhstan customers has asked you to supply items which you’ll need to import. Perhaps they’re not part of the every-day package of services which you deliver locally on unit rates (e.g. day or project rates). Many clients operating in the oil and gas sector will allow you to mark-up the cost of a product by an agreed percentage to cover your procurement costs and profit. It’s a straightforward way of meeting the customer’s needs, and adding to your profits (although it may well reduce your profit margins if you are used to a higher margin on your day-to-day work).

    What’s the catch?

    If you fail to correctly account for WHT or non-resident VAT you may risk wiping out the profits you should have made. For instance, if you mark-up the invoice without including WHT, you may not receive sufficient income from your supplier to cover the WHT, let alone the procurement costs and profit which you should have covered. In our experience, it’s unlikely that clients will accept retrospective claims for additional costs, and the tax remains payable whether or not you recovered it from your client.

    You may be at particular risk of falling foul of this issue if you have a branch in Kazakhstan, but your head office is paying the supplier’s invoices.

    Check you are correctly accounting for WHT and non-resident VAT BEFORE you mark-up supplier invoices for payment by your client.

    If you are considering setting up a business or are already established in Kazakhstan and could benefit from advice on tax or other business issues, we’d be delighted to help.

     Contact us for further information.

    The above information is for general purposes only and is not intended and should not be construed as legal, accounting or tax advice. The content may not be applicable or suitable for every individual’s particular circumstances and should not be used as a substitute for consultation for professional advice on tax or accounting matters.



    Disclaimer: This blog is provided for information purposes only. We accept no responsibility for any losses arising from any action you take or do not take as result of this information. If you require specific advice, please contact us and we will be happy to help.

    Posted in: Tax

  • Overcoming barriers to export

    Posted 23/09/2014


    A recent article in the ICAEW’s Economia magazine highlighted that one of the main blockers to businesses choosing to export to a foreign country was concern about difficulties understanding local culture. Overseas UK embassies often fall short when it comes to business expertise, even if such resource is available, so there can be little help on hand for companies struggling to adjust to local business practice and customs.

    But if businesses don’t find a way to bridge this gap, could they be missing out on some of the most lucrative export markets? Kazakhstan is a country the size of the whole of Western Europe, with a wealth of natural resources and in particular a flourishing oil and gas industry. The country plans to produce 83 million tons of oil, 41 billion cubic meters of gas, as well as to process 14.7 million tons of oil in 2014. These industries are huge and the potential to break into the market is not to be underestimated, particularly as Kazakh companies may not always have the necessary experience and knowledge for complex oil and gas sector services. And yet most British probably have little idea of local Kazakh culture, let alone business practice and procedure. Worse still, some may be influenced by fictional comedic characters of yesteryear which portray an inaccurate and misleading image.

    So how can UK SMEs overcome such issues and seize this opportunity, without having to commit time and money to detailed research and building business relationships from scratch?

    The simplest way is to link up with a company which already has the necessary experience and knowledge. With any luck, they will also have the contacts and business relationships to get your product or service to market in the quickest time possible. Moreover, it can save potential exporters perhaps months or years of research and groundwork in getting to grips with local regulatory and tax requirement and all that may be necessary to get started. With the right advice, companies can avoid the prospect of making mistakes early in their export journey into a new country, like Kazakhstan.

    Like the idea of bringing your products or services straight to a vast new market? If so, get in touch – we have nearly twenty years of experience of running and helping business in Kazakhstan with a vast array of contacts and advice to help your SME hit the ground running! Can you afford not to make contact with Kazopp?

    Posted in: Opportunities for SMEs

  • How to begin your Export Success Story

    Posted 15/09/2014

    Often export success stories involving businesses tapping into the huge potential market in Kazakhstan cite the need to take the long term view.  Many large corporates emphasise the importance of taking time to establish local partnerships and relationships.

    Companies who have built up experience within the country place high value not only on partnerships, but also upon another virtue – patience. The volume of government regulation can appear daunting initially, especially for those without local help or experience.

    But how many SMEs can afford the time and expense involved in developing business relationships? And will it all be worth it?

    When you realise that you’re talking about a country which is geographically larger than the whole of Western Europe – a fact which alone commands attention – potential rewards are exciting. Kazakhstan has a population of 17 million people and has been led by President Nazarbayev since becoming independent of the former Soviet Union in 1991. Notwithstanding its own size, the country is dwarfed by its neighbours, China and Russia and yet scored ahead of these superpowers on its borders in a 2014 World Bank survey on the ease of doing business in various countries.

    The fact that several countries, including China, Canada and some from Western Europe continue to eye the country’s potential, attracted perhaps by the wealth of its natural resources, particularly oil and gas, speaks volumes. In addition, the government has begun to implement reforms in the energy sector and simplify regulatory requirements, for example, as to visas, which should make it even easier to do business there.

    As for the business relationships, the easiest way to get around this is to let an agent with the relevant knowledge, experience and contacts represent you, your products or services. This way any burden upon cash flow can be neatly avoided, not to mention a raft of time consuming research and business relationship building. Exports can be directed straight to the right buyer and market and with the additional advantage of accessible advice as to local business practices and procedures, there need be no sleepless nights worrying about business faux pas.

    Makes sense, right? Let us do the talking for you. What have you got to lose?

    If you’re interested in setting up exports to Kazakhstan or getting help with doing business there, get in touch.


    Posted in: Opportunities for SMEs, Recent Developments

  • Charging UK management costs to your Kazakhstan business? Here’s what you need to know

    Posted 08/09/2014

    Astana capital image 3

    Have you registered a business or branch of your business in Kazakhstan? Do you continue to incur head office and management costs elsewhere?

    If your charges aren’t fully substantiated, you run the risk of them being disallowed by local tax authorities. So act now to ensure that your records are up to scratch.

    Anything you charge to your Kazakhstan business needs to be reasonable and objectively justifiable. For example, you may decide to charge out your head office costs in proportion to the turnover of each of your businesses.  Alternatively, you might allocate costs according to the time your management team spend working on your Kazakhstan business.

    However you decide to allocate your central costs, you’ll need evidence to support these charges. Typically this could include copy invoices, head office accounts, business-wide sales figures or senior management timesheets.

    Remember that without evidence to support your management charges, there is a a risk that the costs will be disallowed and higher taxes plus penalties will apply. In certain circumstances, the authorities can give notice of their intention to freeze your local bank accounts.

    Of course there’s no reason for any of these problems to arise – it’s always best to get it right from the start.

    Whether you’re starting up your local business, or are already up and running, get in touch to check your accounting processes are in shape.

    The above information is for general purposes only and is not intended and should not be construed as legal, accounting or tax advice. The content may not be applicable or suitable for every individual’s particular circumstances and should not be used as a substitute for consultation for professional advice on tax or accounting matters.

    Disclaimer: This blog is provided for information purposes only. We accept no responsibility for any losses arising from any action you take or do not take as result of this information. If you require specific advice, please contact us and we will be happy to help.

    Posted in: Tax

  • Setting up in Kazakhstan – what all businesses need to know

    Posted 01/09/2014

    Business people shake hands on KZ flag

    Last month’s Somerset Chamber of Commerce magazine picked up on research by the British Chambers of Commerce which identified Kazakhstan as one of the countries perceived as providing the greatest opportunities for growth in the next five years.

    Perhaps you’ve picked up on that message too? Maybe you’re keen to move into this market, but no doubt without putting lots of cash at risk.

    Whether you’re thinking from your own perspective as an entrepreneur, or weighing the issues up with support from your board of directors, here are some of the key questions you should be asking.

    • How will you identify and contact potential customers, partners and distributors?
    • How will you obtain sales leads and opportunities?
    • How will you ensure you pre-qualify for tender opportunities, or better still, obtain direct sales?
    • How will you address the practicalities of language, business etiquette and culture?
    • Where will you obtain advice, and who will you trust to understand and protect your interests?

    If you’re thinking of taking things a step further and registering a local branch or setting up a local company to ensure you have a real presence in country:

    • How will you identify and select a local partner?
    • How will you protect your investments, assets and people?
    • How will you obtain visas, work permits, licences and other operational requirements?
    • How will you get money out of Kazakhstan, and what taxes will apply?
    • How will you ensure that management / overhead costs are allowed against local taxes?

    It’s more crucial than ever that your investment is of demonstrable benefit to the local economy. As with other countries in the region, the government are increasingly promoting the importance of “local content”. So you’ll need to understand:

    • What constitutes “local content” in relation to business ownership, staffing, purchasing and manufacturing.
    • How can you maximise local content while bringing in outside investment, assets and people.

    If you’re already doing business in Kazakhstan, why not share your experiences with us via twitter.

    Alternatively, if you’re just starting out in Kazakhstan, let us know if you are looking for opportunities, local delivery partners or professional tax advice. We’ll be happy to talk to you.


    Posted in: Opportunities for SMEs, Recent Developments