COVID-19 Pandemic and Measures to Support Kazakhstan’s SMEs
#Russian Desk
On the 15th of March 2020, Kazakhstan’s President Kassym-Jomart Tokayev issued a decree declaring a state of emergency in Kazakhstan after COVID-19 was assessed by the World Health Organization (WHO) as a pandemic and the first cases of coronavirus in the country were confirmed. In an effort to fight the coronavirus, starting from March 19th, a quarantine regime has been introduced in Kazakhstan’s Nur-Sultan and Almaty cities and organizations throughout the country were recommended to switch to remote operations.
Striving to support business and ensure labor market stability, the Ministry of National Economy of the Republic of Kazakhstan (MNE) announced urgent measures, some of which we have presented below.
Subsidies increase and ease in lending
At the beginning of this year, the Kazakhstan government introduced the new program “Business Road Map – 2025” which provides support to SMEs by guaranteeing and subsidizing interest rates on loans. The program provides for the possibility of enterprises receiving financing of up to 30-50% of the size of the investment project or the declared increase in turnover.
The MNE further increased support of SMEs via the program by increasing the maximum amount of the financing that can be obtained from 2.5 to 7 billion KZT (app. from 5 to 16 ml. USD). Medium-sized enterprises may become authorized to apply for a loan of up to 1 billion KZT (USD 2.2 million.) with a state guarantee of up to 50%. While micro and small enterprises have the opportunity to obtain loans of up to 360 million KZT (800 thousand dollars) with guarantees of up to 85%.
Decrease of inspections
Due to the disruptions caused by the epidemic, Kazakhstan’s laws foresee unscheduled inspections without prior notice. (Para 6 of Art. 144 of the Kazakhstan Entrepreneurial Code). In this regard, it is important that the government has stated to reduce the number of inspections of medium-sized enterprises. Micro and small enterprises organizations are already subject to a three-year suspension on inspections. However, as the statement does not specify the types of inspections, a clear understanding of exemption implementations require further explanation from the state authorities.
Tax incentives
Large-scale shopping centers, cinemas, theaters, exhibitions, and sports facilities have been exempted from property tax for a period of 1 year. In addition, these enterprises shall be exempted from the liability for the default of tax duties in the first quarter.
Agro-industrial enterprises also received tax relief in the form of VAT exemption for imports of biological assets. Producers of agricultural commodities will also be able to get an exemption from paying land tax for agricultural land.
Infrastructure development
The Kazakhstan government will increase investments in projects related to the repair of infrastructure, social facilities and roads. The total amount of assets involved will be 300 billion KZT (700 thousand USD). The main conditions for companies willing to participate in the projects will be the use of local resources and labor.
We would also like to point out that we have only listed some of the measures that have been taken. For example, in order to support businesses, it was also announced that the Foreign Trade Chamber of Kazakhstan will issue force majeure certificates free of charge. The risk of the spread of the virus, remote operation of the companies and decline in world raw material prices (80% of Kazakhstan’s export) will require the state to take additional measures. In case you have any further inquiries please do not hesitate to contact D’Andrea & Partners specialists via the following email address: russiadesk@dandreapartners.com.
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