How to open a branch of a Russian company in the Republic of Kazakhstan?
The Republic of Kazakhstan is one of the countries of the Commonwealth of Independent States (CIS), which directly borders the Russian Federation.
Since the spring of 2022, the relocation of their own business to the Republic of Kazakhstan has become popular among Russian businesses. This opportunity ensures reliable and uninterrupted work with foreign partners around the world, and also allows you to conduct international transactions in a simplified mode. Why do entrepreneurs choose Kazakhstan? There are a lot of reasons for this:
- A large number of native Russian speakers in the country.
- The ability to hire highly qualified staff.
- Availability of a clear and transparent tax system with the ability to work within simplified regimes.
- Developed logistics network for the sale of products to both Western and Asian countries.
- The presence of large megacities with a high standard of living.
- A developed IT sector, the growth of which is supported by preferential tax regimes and other preferences.
- Low entry threshold for new businessmen, including non-residents.
We will tell you more about how to relocate your business to the territory of the Republic of Kazakhstan in this article.
What form of business organization is better to choose?
It is important to keep in mind that investors with foreign capital, including from Russia, can register several forms of ownership, including individual entrepreneurship, Limited Liability Partnership (LLP), Joint Stock Company (JSC), branch or representative office abroad. Due to its bureaucratic accessibility and low financial entry threshold, the most popular options are an LLP, as well as a branch and representative office.
To get acquainted with the differences between an LLP and a branch/representative office, we suggest considering a comparative table.
|Features of LLP||Branch/Representative Office Features|
|An LLP can be created by either one or a group of founders. A legal entity, including one from the Russian Federation, can also act as a member of the company. The authorized capital of the LLP is divided into shares, the size of which is agreed in advance between the participants of the company.||A branch is a separate division of a company that is located outside the place of registration of the head office. The branch has the right to assume all or part of the functions of the parent company, including the production and sale of products.|
|The founders of the LLP are not personally liable for the company’s debts. The risk of their losses is limited only by the limits of the value of their share in the authorized capital of the company.||A representative office is a separate division of a company located outside the place of registration of the parent company. A representative office can perform exclusively representative functions within the region of presence, which includes advertising, marketing, user support, and legal issues.|
|The founders of the LLP, who have not fully contributed their share to the authorized capital, may be jointly and severally liable for|
|obligations of the LLP. However, such responsibility is limited to the limits of the non-contributed part of the contribution of each of the participants.||It is important to keep in mind that branches/representative offices of Russian companies in Kazakhstan operate without the formation of a legal entity, which simplifies their registration.|
|An LLP can have any number of founders from among individuals or legal entities. However, an LLP cannot be organized individually by another Limited Liability Partnership.|
|Participants are required to deposit the authorized capital to the settlement account of the LLP, the amount of which cannot be lower than 100 monthly calculation indices (MCI). In 2022, this number is 320,000 tenge, which is equivalent to 40,000 rubles.|
|An LLP can obtain the status of a small, medium or large|
Opening of a branch of a Russian company in Kazakhstan
As we noted earlier, the branch has the right to engage in commercial activities on the territory of the Republic of Kazakhstan. This option means the ability to organize the production and sale of products, as well as the full provision of services to the population or local businesses. In this regard, branches are the preferred form of business organization for Russian investors.
To register a branch in the Republic of Kazakhstan, the following set of documents will be required from the parent company:
- Application drawn up for the registration authority in Kazakhstan, signed by the founder of the branch.
- Payment order or receipt confirming payment of the registration fee for opening a branch.
- The decision of the parent company to register a new regional division.
- Regulations on the branch.
- General power of attorney of a legal entity issued in the name of the head in Kazakhstan. According to this document, the head will manage the branch in the region. It is important to keep in mind that a person with any citizenship – Kazakh or Russian – can be involved in management. This does not require obtaining a special permit for hiring employees. However, a Russian citizen will need to issue an individual identification number (IIN) for tax registration.
- Extract from the commercial register with a notarized translation for the founders of legal entities.
- A lease agreement for the premises, the address of which will become legal for the company.
- Copies of the passports of the founders of the parent company.
- Extract from the Unified State Register of Legal Entities for Russian companies or from the commercial register of foreign business.
- Notarized TIN of the Russian company.
Also, for registration, you will need data on the exact name of the branch of a foreign company, the full name of the future CEO, the code of economic activity, the approximate number of personnel, a current account opened in one of the Kazakh banks, an electronic digital signature (EDS) in the case of an electronic application.
The collected package of documents is provided to the state registration authority, which in the Republic of Kazakhstan is the Ministry of Justice. You can also submit documents electronically through the state portal Egov.kz. To do this, it is necessary to issue and receive an EDS in advance for submitting documents.
As a rule, the period of state registration of a branch is 3 working days from the date of submission of the application.
Opening of a representative office of a Russian company in Kazakhstan
The procedure for opening a representative office of a company is similar to the procedure for registering a branch.
The tax policy regarding these forms of ownership is also similar. So, the representative office immediately after registration becomes registered with the Kazakhstan tax service as a taxpayer and tax agent. It should be noted that since the representative office cannot conduct independent business activities, part of the fixed assets may be on the balance sheet of the parent company.
In order for the representative office to independently pay the taxes due, the head office needs to draw up a decision giving the Kazakhstan office this function. A similar paragraph should be contained in the text of the Regulation on the Representation of a Legal Entity.
In general, representative offices in Kazakhstan pay a wide range of taxes, including income and social taxes, transport, land, property taxes, registration, environmental and advertising fees.
VALEN’s lawyers specialize in the field of inter-strike law and are ready to provide legal assistance to new and established companies in the Republic of Kazakhstan in case of questions or problems during the registration of the company or in the framework of work in the region.
Question and answer
The individual identification number (IIN) is an analogue of the Russian TIN for registration with the Kazakhstan tax Inspectorate. Registration of any business cannot take place without obtaining an IIN.
A Russian citizen can obtain an IIN at the territorial division of the State Revenue Department of the Ministry of Finance or at the Public Service Center. To register, you must provide the following documents:
• A copy of the passport with notarization.
• Certificate of registration of temporary stay in the country.
As a rule, registration of the IIN takes about 3 working days.
Yes. The IIN is issued remotely by proxy to a citizen of the Republic of Kazakhstan or another intermediary familiar with the registration procedure.
EDS can be obtained independently and without intermediaries. To do this, you need to have a computer with a webcam and the NCALayer program installed, as well as a mobile phone to receive SMS notifications. Remote registration of EDS takes place through the portal Egov.kz
As we noted earlier, the threshold for entering the Kazakh market is quite low.
Thus, the parent company must pay a registration fee of 6.5 MCI (about 20,000 tenge), provided that the branch will belong to a large business entity. Small and medium-sized businesses are exempt from the obligation to pay the registration fee.