Following the confirmation of Nursultan Nasarbaev as President until 2000 the country offers political stability. Commitment to privatisation, market economy, and encouragement of foreign investment has been stated.
Considerable progress has been made in the reduction of inflation and stabilisation of the currency which, introduced in November 1993 at a rate of 4.5 to the US dollar stood at around 50 to 31 December 1994, and at 63 six months later.
A new law on accounting is to be issued 1 January 1996 based on International Standards.
The country remains committed to privatisation, but the progress with large scale privatisation has been slow. Small scale privatisation has proceeded as has medium scale by coupon auctions to investment funds established for the purpose.
A stock market has recently been established. Three companies are currently listed.
Tax and investment
The taxation system in Kazakhstan has suffered from a wide variety of taxes and regulations, all of which have been subject to a range of interpretations by different officials.
The new tax code which was issued recently, and came into force on 1 July 1995 addresses many of these issues. It reduces the number of taxes and contributions from over 40 to less than 20. There remains however considerable uncertainty over how the code will be applied in practice.
In practice while foreign investment is welcomed there is less evidence of this welcome. No tax privileges are available to foreign investors. Some potential problems for foreign investors remain - absence of double tax treaties (currently only six in force) and 20% VAT on import of capital goods are examples.
Recently a number of contracts have been signed by the Kazakhstani government whereby a "foreign investor" is issued a management contract for the enterprise for a period of time (perhaps 5 years) and receives in return a percentage of profits.
Coopers & Lybrand
Coopers & Lybrand (Kazakhstan) provides audit services, accounting, taxation and consultancy advice to Kazakhstani companies and governmental bodies as well as to overseas companies investing into Kazakhstan. The firm has some 12 staff in Almaty office.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
For further information contact Jonathan Wale on +7 3272 622101, or enter text search 'Coopers & Lybrand' and 'Business Monitor'.
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It is true that accountants are well ahead of most other professions when it comes to risk management and certainly, the "big four" have had in place risk management processes and dedicated resources far earlier than solicitors.
Credit risk certainly stands as a cornerstone of the banking system. Concerns that counterparties will default on their repayment obligations has become a growing concern over years.
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