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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

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.
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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.
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Posted in: Tax
Setting up in Kazakhstan – what all businesses need to know

Posted 01/09/2014

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
Pushing to New Export Markets?

Posted 28/08/2014

Successful exporting is often about knowing where and how to tap into demand for your products and services. Choosing the right international market is crucial to your success, whether your company is just starting out in export or already a seasoned exporter.

So where do you start?

Thorough market research is vital before you launch into doing business in a new country. It’s not only about finding a country where demand for your exports will be high – understanding the market will be just as important if you are to get your market entry strategy right.

How to assess overseas market risks

Research into potential export markets should include careful analysis of any:
- Business risk – how will you avoid the pitfalls of a different business and social culture? Knowledge of local custom and practice will help you to avoid causing offence, misunderstandings and delay.
- Legal or regulatory risk – what difficulties might arise from doing business under an unfamiliar legal or regulatory framework and dealing with different regulatory bodies?
- Political risk – how stable is the market politically, economically and socially.
Not only can the cost of such international research mount up, it also requires significant investment in terms of time – a resource which is often in short supply in the SME sector. How many business owners have time to travel to other countries to find out how local business operates? Not to mention the strain such enquiries could place on cash flow. Whilst government assistance may initially be available through UKTI, more detailed knowledge about an overseas market may be harder to come by without some form of partnership with an agent or company with the right knowledge and experience.

This is where specialist companies like Kazopp can be invaluable. We can help by guiding your SME to where the potential demand is and working with you to facilitate your route into exports to Kazakhstan. We’ve already done the leg work in country and have built up knowledge, experience and most importantly, the business contacts and relationships which can give SMEs new to the country a head start.

If you’re interested in starting or expanding your export portfolio, then get in contact with us.

Posted in: Opportunities for SMEs
Energy Sector Reforms in Kazakhstan

Posted 18/08/2014

Kazakhstan has announced major reforms to the country’s energy sector. Kazakhstan’s president, Nusultan Nazarbayev confirmed that a new regulatory body will replace the Ministry of Oil and Gas and will benefit from greater links to other sectors, such as industry, technology, environment and water resources.

Analysts are already predicting that a new and improved regulatory body with a broader remit could have a significant impact upon speeding up progress for energy projects, particularly within the oil and gas industries.

Here at Kazopp, we welcome these further steps to streamline the regulatory framework for energy projects, which are likely to have a positive impact upon doing business in this sector. They further demonstrate the Kazakh authorities desire to facilitate business within the country, as shown by the recent relaxation of visa requirements. All good news for potential exporters looking to benefit from the opportunities available in Kazakhstan, given the sheer scale of the country’s resources and projects.

Never a better time to start thinking about growing your business by exporting to this exciting market – contact us to find out more.

Posted in: Opportunities for SMEs, Recent Developments
Could your SME hold the key?

Posted 04/08/2014

It’s a well known fact that much of the world’s easily accessible oil has now been exhausted. Whilst we are not about to run out of oil any time soon, the challenges for the future will be in finding ways to bring oil supplies which are not so accessible online.

There is plenty of anecdotal evidence from oil/gas field projects, particularly the Kashagan field in western Kazakhstan as to operational difficulties and delays. That field alone is believed to contain 13 billion barrels of crude oil.

Kashagan has suffered significant delays due to the presence of hydrogen sulphide and as a result of gas leaks discovered in the pipelines. There are also difficulties in managing the project due to extreme weather conditions – ice surrounds the oil field for lengthy periods throughout the year.

The delays that such issues or mistakes cause are a major headache for the large oil companies – when something goes wrong, it costs a HUGE amount of capital.

Might your SME hold the solution to the issues facing Kazakhstan’s oil industry?

It will take a good degree of innovation and specialist skill to solve these issues and these are qualities often found in manufacturing SMEs. But how many are confident that they have the time and resources to consider exporting to an unfamiliar country like Kazakhstan, far from UK shores?

And yet taking that step could be the big break most SME owners can only dream of.

If your SME might hold the key to solving some of these issues, exporting to Kazakhstan could send your profits soaring. For advice and support which can make a real difference in easing the way to growth into this exciting market, contact us.

Posted in: Opportunities for SMEs