Temat: "Astana - New City" special economic zone Kazakhstan

"Astana - New City" special economic zone

AIMS OF CREATION THE SEZ

PREFERENCES GRANTED ON THE TERRITORY OF THE SEZ "АСТАНА - NEW CITY" TAX PREFERENCES

1. Tax prefernces

CUSTOMS REGULATIONS

THE BENEFITS OF THE INVESTORS

AIMS OF CREATION THE SEZ

According to the basic guidelines of the State Program for Social and Economic Development of Astana City, "Prosperity of Astana is the prosperity of Kazakhstan" and the Master plan for Development of the Capital, the administrative, business, social and cultural, scientific and educational centers will be constructed, to allow for creation of metropolitan atmosphere to the standards of capitals of the advanced countries.

To solve this task the special economic zone "Astana - new city" providing for creation of the favorable investment climate for construction of the new center projects on the left-bank of the City was established by the Decree of the President of the Republic of Kazakhstan.

The normative-legal acts determine tax and customs preferences for the investors who are carrying out construction and mounting of the administrative, residential complexes and projects of the capital infrastructure.

Creation of the SEZ "Astana - the new city" gives the positive economic benefit both for the state and potential investors.

Benefit for investors:

- State support to direct investments into construction of Astana city projects on the left bank of the Ishim river;
- Tax and customs preferences;
- Opportunity for introduction of the most advanced technologies and use of modern scientific and technical achievements in field of the town-planning;
- Allocation of land plots for construction of the projects in the new city centre on the territories with engineering infrastructure.

According to the feasibility study for the project of the SEZ "Astana - new city" for the whole period of functioning, i.e. till 2007, it is planned to involve investments at amount of 238.6 billion KZT (1.6 billion US Dollars). Based on the planned amount of investments, it is necessary to involve KZT 47.7 billion (317 million US Dollars) on the average annually.

Besides, it is necessary to regulate the investments flow following the proportions for functionality of the projects under construction. It is supposed, that administrative buildings for the state authorities shall be financed from the state budget (unit weight shall be % 16.3).

It is necessary to use private investments for other projects planned for construction on the territory of the SEZ "Astana - new city".

Kisho KurokawaThe author of the Master Plan for development of the new capital Astana is Kisho Kurokawa, a famous academician, President of the Japan Society for Land Development, and the Royal Academy of Arts in Great Britain.

The project was awarded the first award at the international Competition for Plans of Development of the New Capital of Kazakhstan held in 1998.







PREFERENCES GRANTED ON THE TERRITORY OF THE "SEZ -АСТАНА - NEW CITY" TAX PREFERENCES

1. TAX PRIVELEGES

In accordance with the Law of RK № 2235 as of 24.04.1995 «On Taxes and Other Compulsory Payments to the Budget» with amendments and addenda № 223 as of July 5th, 2001, and 312-II as of March 21st, 2002, the following tax privileges exist in the territory of «Astana – New City» SEZ:

- the proceeds from products (goods and services), sold in the territory of «Astana – New City» SEZ and completely consumed in the process of construction and commissioning of infrastructure utilities, administrative and residential complex buildings according to the design estimates documents, are to be exempted from the value added tax (VAT).

- such privileges are provided to the following taxpayers: persons and legal entities, and non-residents who act by means of a permanent establishment, registered in «Astana – Zhana Khala» Tax Committee in accordance with paragraphs 2 and 3 of article 208-1 of the Code of the Republic of Kazakhstan «On Taxes and Other Compulsory Payments to the Budget» №209-II as of 12.06.2001.

A taxpayer has the right to forgo the granted privilege, for which such a taxpayer has to submit an application to «Astana – Zhana Khala» Tax Committee, confirming the taxpayer’s waiver of exemption from the value added tax.

The land-tax is not applicable to the areas situated within «Astana – New City» special economic zone with infrastructure facilities, administrative or residential housing, which have been built there or are under construction during the existing of the said economic zone.
The real property tax is not applicable to the residual value of buildings and utilities built within «Astana – New City» special economic zone during the period of its functioning by persons and legal entities.

Taxation of goods sold in the territory
of «Astana – New City» special economic zone

The proceeds from consumables and equipment sold in the territory of «Astana – New City» SEZ and completely consumed in the process of construction and commissioning of infrastructure utilities, administrative and residential housing in accordance with the design estimates documents, are subject to the value added tax (VAT) at the zero rate.

The consumables are defined as products directly involved in the process of construction of buildings, utilities and infrastructure objects. Power, gas, diesel fuel, and water do not fall under the category of consumables completely consumed in the process of construction.

The following documents are required for the application to the zero rate VAT taxation:

1. agreement (contract) for the supply of consumables, made with taxpayers who are registered in «Astana – New City» SEZ and are involved in construction of infrastructure utilities, administrative, and residential buildings within the special economic zone;

2. a copy of customs declaration executed by the customs body that allowed importing the consumables into the free customs zone in accordance with the customs regulations;

3. waybills, confirming the shipping of goods to entities registered as taxpayers in «Astana – Zhana Khala» Tax Committee: legal entities; persons; non-residents who act through a permanent establishment;

4. copies of documents confirming the receipt of goods by entities registered as taxpayers in «Astana – Zhana Khala» Tax Committee: legal entities; persons; non-residents who act through a permanent establishment.

Within 60 days upon the application, the taxpayer shall be reimbursed for the VAT paid for the products sold at the zero rate, provided that such products have been completely consumed during the construction in the SEZ.

2. CUSTOMS REGULATIONS

The activity of «Astana – New City» SEZ is regulated by the Constitution of the Republic of Kazakhstan, President’s Decree № 2823 «On Special Economic Zones in the Republic of Kazakhstan» as of 26 January 1996, President’s Decree №645 «On Creation of «Astana – New City» Special Economic Zone» as of 29 June 2001, the Customs Code of the Republic of Kazakhstan and by other laws of the Republic of Kazakhstan.

The customs regulations in «Astana – New City» SEZ complies with the customs legislation of the Republic of Kazakhstan. «Astana – New City» SEZ area is considered as a free customs zone in the territory of the Republic of Kazakhstan.

In accordance with the Customs Code of the Republic of Kazakhstan, which took force on May 1st, 2003, «free customs zone» customs treatment is the customs regulations providing for foreign and local goods storage and use in special territorial areas of the special economic zone free from customs duties and taxes, except for the excise duties for imported goods, and without application of non-tariff regulations, except for the safety requirements.

«Astana – Zhana Khala» Customs carries out customs control over the goods under the customs treatment of free customs zone in «Astana – New City» SEZ. Such goods can be transported only within the territory of «Astana – New City» SEZ. The borders of the SEZ are equipped with special fence and there are «Astana – Zhana Khala» Customs’ checkpoints along the perimeter. Transportation between the areas of the SEZ requires the permission and supervision of «Astana – Zhana Khala» Customs.

Legal regulations of the Republic of Kazakhstan provide for the tax and customs privileges for the investors involved in construction of administrative, residential housing, social and public infrastructure objects in «Astana – New City» SEZ.

When entering foreign goods into the free customs zone they are free from customs duties and taxes, except for the excise duty for the imported goods, and the non-tariff restrictions are not applicable except for the fire safety requirements. When such goods are exported from the special economic zone territory to the general customs territory of the Republic of Kazakhstan, they are again subject to the customs duties and taxes, and the non-tariff restrictions are applicable in accordance with the terms of the declared customs treatment.

When entering/exporting Kazakhstani goods into/from special economic zones territory under the free customs zone regulations they are free from customs duties and taxes, and the non-tariff restrictions are not applied. Export of such goods beyond the customs territory of the Republic of Kazakhstan can be done in accordance with the terms of a chosen customs treatment.

According to the Rules for Customs Clearing of Goods Under Customs Treatment of the Free Customs Zone, approved by the Order of the Customs Control Agency of RK №187 «On Customs Control Under Various Customs Treatments» as of 07.05.2003, the goods imported into the territory of the SEZ are subject to declaration by submitting the following documents to the customs body: customs declaration; documents confirming the end use of the declared goods in the SEZ, and other documents defined by the RK Customs Code as to submission in accordance with the requirements of the chosen customs treatments.

When transporting goods into the territory of the SEZ, the periodical and preliminary declaration regulations may be applicable as well as simplified procedures of customs clearing.

The customs body issues permits for the entry of vehicles working in the territory of the SEZ (transportation of workers, passengers, support staff) and not used for transportation of goods.

The entities having business in «Astana – New City» SEZ shall keep records of the goods and of operations with the goods under the customs treatment of the free customs zone, and shall submit corresponding reports to «Astana – Zhana Khala» Customs every quarter before the 10th day of the month following the reported period. The owners of the goods declared under the customs treatment in the free customs zone shall be responsible for the failure to submit such reports to the customs body of the Republic of Kazakhstan and for an inadequate record keeping of the goods in accordance with the laws of the Republic of Kazakhstan.

The customs treatment of the free customs zone expires:

1) when the goods have been cleared under another customs treatment;

2) when the goods have been processed or consumed according to the needs of the special economic zone.

When the SEZ period expires, the goods declared under the customs treatment in the free customs zone shall be declared under another customs treatment before the termination of the SEZ as defined by the laws of the Republic of Kazakhstan, except for the goods that have been processed or consumed for the needs of the SEZ.

THE BENEFITS OF THE INVESTORS

-The state support of direct investments into construction of Astana city.

- Significant tax privileges and preferentials.

- Opportunities to introduce modern technologies and scientific achievements in the field of construction.

- Getting land for construction in the new centre of the capital.

- Formation and development of real estate market.

- The guaranteed right to prolong the investment activity on the initial terms until the expiry of the SEZ period, but not more than for 10 years, irrespective of the changes in the juridical regime of the SEZ or its liquidation before the appointed time, including the extension of the area.

http://www.astana.dan.kz/sez/sez_angl/index.html