Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

KAZAKHSTAN

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of January 31, 2007)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: July 16, 1996.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
Other security restrictionsThere is provision for the right to introduce a special permit regime for certain foreign exchange operations in the event of a threat to the economic security of Kazakhstan and the stability of its financial system. Decisions to introduce or extend the special permit regime, and also the list of operations that may be performed only with a special permit, are determined by the president after joint consultations with the government and the National Bank of Kazakhstan (NBK).
References to legal instruments and hyperlinksn.a.
Exchange Arrangement
CurrencyThe currency of Kazakhstan is the Kazakhstani tenge.
Exchange rate structureUnitary.
Classification
Managed floating with no predetermined path for the exchange rateThe exchange rate of the tenge is determined on the basis of supply and demand in the foreign exchange market. The foreign exchange market includes the Kazakhstan Stock Exchange (KASE), which conducts daily trading online using an electronic trading system, an over-the-counter interbank market, and a network of more than 3,000 exchange bureaus handling foreign exchange cash transactions. Banks may participate in trading sessions on their own account or on behalf of their clients. Banks may also trade in an over-the-counter interbank market at freely negotiated rates.
The official exchange rate of the tenge against the dollar is determined daily on the basis of the weighted average rate at 11:00 a.m. the previous day on the KASE. The rates for other currencies are calculated on the basis of their cross rates against the dollar. The NBK publishes daily exchange rates of certain currencies against the tenge for accounting and customs payments computation purposes. Commercial banks set their own exchange rates without restrictions.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketForeign exchange futures are quoted on the KASE. Forward exchange operations are also conducted in the interbank market.
References to legal instruments and hyperlinksn.a.
Arrangements for Payments and Receipts
Prescription of currency requirementsPayments and transfers between residents are effected in domestic currency with the exception of cases explicitly specified by the Law on Foreign Exchange Regulation and Foreign Exchange Control.
Payments and transfers between residents and nonresidents may be conducted in any currency as long as they comply with the requirements of the foreign exchange laws.
Controls on the use of domestic currency
For capital transactionsWhen used in transactions between residents and nonresidents, domestic currency is considered a foreign exchange asset. Therefore, such transactions are subject to all provisions of foreign exchange laws with respect to capital transactions.
Transactions in capital and money market instrumentsYes.
Transactions in derivatives and other instrumentsYes.
Credit operationsYes.
Use of foreign exchange among residentsForeign exchange transactions among residents are prohibited, with the exception of (1) transactions in which one of the parties is the NBK or the MOF; (2) transactions with foreign exchange assets that are considered banking and other transactions, which authorized banks and authorized organizations have a right to perform in accordance with a license and the laws; (3) payment for banking services involving the performance of foreign exchange transactions, as well as the payment of fines (penalties) under banking service agreements for services involving foreign currency; (4) transactions involving the purchase, sale, payment of commissions, and/or redemption of securities issued by residents in foreign currency and securities issued by nonresidents; (5) payments and transfers of funds under agency agreements involving exports (imports) with the use of transferable LCs as a form of payment; (6) the transfer of bills of exchange denominated in foreign currency in fulfillment of monetary obligations; (7) settlements with residents who are licensed by the NBK to engage in retail trade and provide services for cash foreign exchange; (8) payment for expenses related to business travel by employees outside Kazakhstan; (9) unrequited money transfers or unrequited transfers of foreign exchange assets by individuals to individuals and to legal entities engaged in charitable activities; (10) placement of bank deposits by individuals on behalf of other individuals; and (11) transactions involving the payment of taxes and other compulsory payments to the budget in those cases provided for by law.
Payments arrangementsNo.
Administration of controlForeign exchange control is provided by the NBK, other government bodies within the scope of their authority as established by law, and foreign exchange control agents. Foreign exchange control agents are authorized banks and authorized organizations performing certain types of banking operations, as well as other organizations that have been assigned responsibility for monitoring compliance with foreign exchange legislation in the performance of their operations in accordance with licenses they have received. The NBK monitors compliance by residents and nonresidents with the requirements of foreign exchange legislation and proper performance of the functions of foreign exchange control agents by authorized banks and authorized organizations. The MOF provides for monitoring and supervision of government loans, supervision of the earmarked and efficient use of government guaranteed loans, and monitoring of government and government guaranteed debt. The Ministry of Industry and Trade issues licenses to import and export goods (work, services) and to perform other activities within the scope of its authority, and it also monitors licensees’ compliance with qualification requirements and licensing regulations. The Agency for the Regulation and Supervision of the Financial Market and Financial Institutions is responsible for licensing the organization by banks of exchange operations with foreign currency as part of a general banking license.
The Customs Control Committee of the MOF performs customs control and, within the scope of its authority, foreign exchange control.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)Refined gold bullion is classified as a foreign exchange asset.
On external tradeThere are no restrictions on the export of refined precious metals. Control over the foreign trade of refined precious metals is maintained in the same manner as over other goods.
Controls on exports and imports of banknotesIndividuals exporting or importing domestic or foreign currency in excess of the equivalent of $3,000 must declare it to customs.
On exports
Foreign currencyResidents and nonresidents may export cash foreign currency up to $10,000 without documentary evidence of legal origin. Individuals exporting cash foreign currency from Kazakhstan in an amount in excess of $10,000 must present the following to customs authorities: (1) a customs declaration confirming the import of cash foreign exchange into Kazakhstan, for the export of previously imported cash foreign exchange; and/or (2) a personal income tax return (taxpayer’s copy), for the export by residents of cash foreign exchange with a different origin.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResidents may open foreign currency accounts in authorized banks without restrictions.
Held abroadYes.
Approval requiredEffective January 1, 2007, residents are free to open accounts with nonresident banks. However, they are required to inform the NBK of the accounts opened within 30 days following the agreement or returning from abroad. Previously, an NBK license was required to open these accounts, except in cases where the account holders were (1) banks, (2) resident individuals who opened accounts with banks in member countries of the OECD or FATF, or (3) resident individuals residing abroad temporarily who opened accounts with foreign banks. In the latter case, if the account was opened at a bank located in a country that was not on the OECD and FATF list, on their return to Kazakhstan the resident individuals had to have closed the account at the foreign bank or applied to the NBK for a license to continue using the account.
Depending on the purpose for which an account was opened, an NBK license was not required by (1) resident financial institutions, if the accounts were opened for the purpose of effecting transactions with financial instruments in international securities markets; (2) resident legal entities, if the account was intended for the transfer of funds required for paying in authorized capital of a legal entity, in cases in which the requirement to open such an account was established by the legislation of the foreign state in which the resident was planning to invest; (3) resident legal entities, if the accounts were intended for the transfer of funds for the purpose of securing the liabilities of residents to nonresidents under loans solicited from nonresidents; and (4) resident legal entities, if the accounts were intended for the financing of expenses related to the maintenance of branches and representative offices of the given legal entity because these accounts were subject to registration with the NBK.
Accounts in domestic currency held abroadThe regulation of accounts abroad is identical for foreign and domestic currency accounts.
Accounts in domestic currency convertible into foreign currencyAll domestic currency accounts are convertible.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf.
Nonresident Accounts
Foreign exchange accounts permittedEffective January 1, 2007, nonresidents may open foreign exchange accounts with authorized banks without restrictions.
Domestic currency accountsEffective January 1, 2007, nonresidents may open domestic currency accounts with authorized banks without restrictions.
Convertible into foreign currencyAll domestic currency accounts are convertible.
Blocked accountsNo.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsEffective January 1, 2007, all advance payments for imports are allowed without restrictions. Previously, advance payment for imports for a period of up to 180 days was allowed without restriction. Advance payment for imports for a period of more than 180 days was considered movement of capital and required an NBK license if the transaction amount exceeded $10,000.
An NBK license was also required if the import contract specified a delivery date of less than 180 days, but the actual date on which the nonresident fulfilled the obligation to deliver goods or return funds exceeded 180 days.
Documentation requirements for release of foreign exchange for importsEffective January 1, 2007, presentation of an import contract or other supporting documents is required for effecting import payments.
Domiciliation requirementResident juridical persons are required to submit relevant import contracts to an authorized bank when purchasing foreign exchange for import payments.
OtherEffective January 1, 2007, a transaction passport must be completed for accounting purposes only for each import transaction valued in excess of the equivalent of $10,000 with the servicing bank. Previously, the transaction passport had to be completed for the customs authorities and was used to verify compliance with the terms of the import contract. It was monitored by the customs office and the bank until the completion of the transaction. Registration with the NBK was required for early delivery by a nonresident of imports valued in excess of $300,000 more than 180 days before the payment date. Registration requirements did not apply to import contracts when transaction passports had been completed for the entire amount of the contract.
Also, effective January 1, 2007, deferral of payment on imports or advance payment on imports is considered a commercial credit. A resident importer must register a commercial credit with the NBK in specified cases.
Import licenses and other nontariff measuresThere is a licensing regime for imports of alcoholic products, explosives, products for military use, weapons, poisonous substances, industrial wastes, nuclear materials (equipment), and special equipment for police investigation uses.
Negative listImports of all types of military-style weapons and ammunition; weapons of mass destruction, as well as materials and equipment that could be used in the production of weapons of mass destruction; narcotic drugs, psychotropic substances and their precursors, as well as paraphernalia for their use; printed and graphic materials aimed at the overthrow of the state system and social order that contain propaganda promoting war, terrorism, violence, or racism, as well as materials with pornographic content; and ozone-depleting substances, as well as products that contain ozone-depleting substances, are prohibited.
Import taxes and/or tariffsImports are subject to (1) VAT and customs duties (certain goods are exempt); (2) excise taxes (where applicable); and (3) antidumping, protection, and compensation duties (if such duties exist). The VAT rate is 15%. Effective August 17, 2006, some import tariff rates were changed.
State import monopolyNo.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control http://213.211.77.60/cont/publish557033_3640.pdf; Resolution No. 129 of the NBK Board of December 11, 2006, on Approval of Rules for the Performance of Foreign Exchange Operations in the Republic of Kazakhstan; http://213.211.77.60/cont/publish369313_3431.doc; Resolution No. 86 of the NBK Board of August 17, 2006, on Approval of Rules on the Performance of Export-Import Foreign Exchange Controls in the Republic of Kazakhstan; http://213.211.77.60/cont/publish432181_3279.doc; Government Resolution No. 1037 of June 30, 1997, on Licensing Exports and Imports of Goods (Work, Services) in the Republic of Kazakhstan; Government Resolution No. 681 of July 10, 2003, on Approval of Import and Export Bans in the Republic of Kazakhstan on Goods and Vehicles, Lists of Goods That May Not Be Placed under Certain Customs Regimes, and Bans and Restrictions on the Performance of Operations with Goods Placed under Specific Customs Regimes; Government Resolution No. 1716 of November 16, 1999, on Approval of the Protocol on the Uniform Procedure for the Application of Technical, Medical, Pharmaceutical, Public Health, Veterinary, Phytosanitary, and Environmental Standards, Regulations, Rules, and Requirements with Respect to Goods Imported into Customs Union Member States; and Government Resolution No. 765 of August 17, 2006, on the Customs Tariff of the Republic of Kazakhstan.
Exports and Export Proceeds
Repatriation requirementsEffective January 1, 2007, residents must ensure that domestic and foreign currency received by them in payment for export goods (work, services) is credited to bank accounts with authorized banks within the time period stipulated by the terms of the transaction. Previously, all proceeds from exports of goods (work, services) had to be received by residents and credited to accounts at authorized banks within 180 days of the date of export of the goods (work, services).
An NBK license was previously required to credit export proceeds in foreign exchange to accounts at authorized banks or to fulfill obligations in some other manner more than 180 days from the export date. An NBK license established repatriation deadlines substantiated by the resident.
In order to credit export proceeds to a resident’s account at a foreign bank, the resident must have had an NBK license to open the given account at a foreign bank or a certificate of registration with the NBK, or the resident must have notified the NBK of the existence of such an account.
The crediting of export proceeds by a resident to bank accounts at authorized banks is not required in the following cases: (1) the foreign exchange proceeds are credited to the resident’s accounts at foreign banks if these accounts are intended to provide security for the resident’s obligations under the terms of a loan solicited from a nonresident; and (2) the foreign exchange proceeds are credited to accounts at foreign banks if these accounts are intended to support the activities of branches and representative offices of the resident that have been opened abroad. In the event that export proceeds in foreign exchange are not credited to accounts at authorized banks, the repatriation requirement is considered to have been met in full or in part if (1) a nonresident’s obligation is offset by a counterclaim of the same nature; (2) a nonresident’s obligation is met by replacing the original obligation between the parties with a different obligation between the same parties that provided for a different object or means of fulfillment; (3) the right of claim on a nonresident is assigned to another party; and (4) an insurance payment is received, if an insured event occurs under insurance agreements covering the risk of default by a nonresident.
Financing requirementsNo.
Documentation requirementsEffective January 1, 2007, the export contract must be presented only to the bank servicing the transaction (previously, to the customs authorities also). Effective January 1, 2007, a transaction passport must be completed for accounting purposes for export transactions involving the movement of goods valued in excess of the equivalent of $10,000 only for the bank servicing the transaction (previously, to the customs authorities). Previously, the transaction passport was checked to verify compliance with the terms of the export contract and was monitored by the customs office and the bank until completion of the transaction. Effective January 1, 2007, deferral of payment on exports or advance payment on exports is considered a commercial credit. A resident exporter must register a commercial credit for exports with the NBK in the following instances: (1) if a resident made early delivery on exports valued in excess of the equivalent of $50,000 more than 180 days before the payment date, effective January 1, 2007; and (2) if a nonresident makes prepayment on exports valued in excess of the equivalent of $300,000 more than 180 days before the delivery date. Registration requirements do not apply to export contracts where transaction passports are required. Previously, advance delivery of exports for a period of up to 180 days was allowed without restriction. Deferral of payment for exports beyond 180 days was considered a capital transaction and required an NBK license if the amount of the export delivery exceeded $10,000. An NBK license was also required in the event that the export contract specified a delivery date of less than 180 days, but the actual date on which the nonresident fulfilled the obligations to pay for goods or return delivered goods exceeded 180 days.
Export licensesExport licenses are required for 21 categories of goods.
Without quotasCertain listed exports require licenses, and some listed exports are licensed with governmental approval.
With quotasCertain listed exports require licenses in accordance with the international obligations of Kazakhstan.
Export taxes
Other export taxesCustoms duties apply to exports of scrap and waste of ferrous and nonferrous metals, aluminum and aluminum products, skins and hair of domesticated animals, and parts of railway locomotives, wagons, or rolling stock. Seasonal duties apply to exports of petroleum products. There is a rent tax on crude oil and gas condensate exports ranging from zero to 33%, depending on the market price (it does not apply to developers who have signed production-sharing contracts). Effective August 17, 2006, changes were introduced in the rates of export customs duties applicable on an interim basis for goods produced from oil, and in the list of such goods.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf; Resolution No. 129 of the NBK Board of December 11, 2006, on Approval of Rules for the Performance of Foreign Exchange Operations in the Republic of Kazakhstan; http://213.211.77.60/cont/publish369313_3431.doc; Resolution No. 86 of the NBK Board of August 17, 2006, on Approval of Rules on the Performance of Export-Import Foreign Exchange Controls in the Republic of Kazakhstan; http://213.211.77.60/cont/publish432181_3279.doc; Government Resolution No. 1037 of June 30, 1997, on Licensing Exports and Imports of Goods (Work, Services) in the Republic of Kazakhstan; Government Resolution No. 1282 of October 18, 2000, on Approval of a List of Products Subject to Export Controls in the Republic of Kazakhstan; Code of the RK No. 209 of June 12, 2001, on Taxes and Other Mandatory Payments to the Budget (the Tax Code), Section 9-1; Government Resolution No. 1036 of October 15, 2005, on Collection of Customs Duties When Exporting from the Customs Territory of the Republic of Kazakhstan Goods Produced from Oil; Government Resolution No. 765.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersSupporting documents must be presented.
Trade-related payments
Quantitative limitsThe total amount of insurance premiums paid by the assignor to nonresident reinsurance organizations, less commissions received from them by the assignor, must not exceed 85% of the total amount of insurance premiums received under insurance agreements (with consideration for those paid to reinsurance organizations) at the completion of a full fiscal year.
Indicative limits/bona fide testYes.
Investment-related payments
Indicative limits/bona fide testYes.
Payments for travel
Indicative limits/bona fide testIn order to use foreign exchange funds for the purposes of paying for travel by their employees, resident legal entities must present documents confirming the use of the funds as designated.
Personal payments
Indicative limits/bona fide testIn the event that an individual does not have supporting documents, payment (the disbursement of funds to the individual) is effected only if the individual records an entry confirming the personal nature of the given payment and permitting the authorized bank to provide information about the transaction to law enforcement authorities and the NBK on their request.
Foreign workers’ wages
Indicative limits/bona fide testYes.
Credit card use abroad
Indicative limits/bona fide testResident legal entities paying more than $10,000 are subsequently required to provide documents identifying the purpose of the expense.
Other paymentsEffective January 1, 2007, deferral of payment or advance payment on services provided by a nonresident is considered a commercial credit.
Prior approvalEffective January 1, 2007, no prior approval is required for advance payment for services by nonresidents in excess of $10,000, if delivery of the services is deferred for more than 180 days. Previously, an NBK license was required to effect such payments.
Indicative limits/bona fide testYes.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf; Resolution No. 129 of the NBK Board of December 11, 2006, on Approval of Rules for the Performance of Foreign Exchange Operations in the Republic of Kazakhstan; http://213.211.77.60/cont/publish369313_3431.doc; RK Law No. 126 of December 18, 2000, on Insurance Activity.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsRepatriation requirements extend to foreign exchange proceeds from exports of services (work). Effective January 1, 2007, the time limit to repatriate proceeds from the export of services (work) was changed from 180 days to the time period stipulated by the terms of the transaction.
Restrictions on use of fundsNo.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf; Resolution No. 129 of the NBK Board of December 11, 2006, on Approval of Rules for the Performance of Foreign Exchange Operations in the Republic of Kazakhstan; http://213.211.77.60/cont/publish369313_3431.doc.
Capital Transactions
Controls on capital transactionsYes.
Repatriation requirementsYes.
Controls on capital and money market instruments
On capital market securitiesTransactions (with the exception of those involving direct investments) performed through Kazakhstani professional participants in the securities market within the limits of their licenses do not require an NBK license or registration with the NBK.
Shares or other securities of a participating natureEffective January 1, 2007, residents must notify the NBK after the fact of foreign exchange transactions associated with the acquisition of shares or other securities of a participating nature not considered direct investment that exceed $50,000 (for securities issued by nonresidents) or $300,000 (for securities issued by residents). Previously, these transactions had to be registered with the NBK, except for purchases effected through resident brokerage companies on the basis of brokerage agreements or for purchases from resident banks.
Professional securities market participants must provide notification of transactions with securities effected via Kazakhstani professional securities market participants.
Purchase locally by nonresidentsYes.
Sale or issue locally by nonresidentsSale or issue locally of securities of nonresidents must go through an authorization process for trading in the organized securities market, following the procedure established by a regulatory legal act of the authorized body.
Purchase abroad by residentsYes.
Sale or issue abroad by residentsAn appropriate permit from the authorized body is required for the issue or placement of issued securities by a resident organization of Kazakhstan on the territory of a foreign state.
Bonds or other debt securitiesRegulations governing shares or other securities of a participating nature apply.
On money market instrumentsRegulations governing shares or other securities of a participating nature apply.
On collective investment securitiesRegulations governing shares or other securities of a participating nature apply.
Controls on derivatives and other instrumentsAccounting and registration of transactions involving derivative securities traded in the organized securities markets are performed in accordance with the rules for securities trading on the stock exchange. Effective January 1, 2007, residents must notify the NBK after the fact of foreign exchange transactions associated with derivative financial instruments, if the amount of the payment and/or transfer by the resident to a nonresident and/or nonresident to a resident exceeds $50,000. Professional securities market participants must provide notification of transactions with derivatives effected via Kazakhstani professional securities market participants. Previously, residents had to have an NBK license to perform transactions with derivative financial instruments between residents and nonresidents, except if the residents were banks, insurance organizations, organizations involved in the investment management of pension assets, and pension savings funds independently engaged in the investment management of pension assets; the transactions were effected through Kazakhstani professional participants in the securities market within the limits of their licenses.
Controls on credit operationsEffective January 1, 2007, registration with the NBK is required for credits for a term of more than 180 days in excess of $50,000 by residents to nonresidents and $300,000 to residents from nonresidents. Registration is also required in instances where commercial credits were provided for a term of 180 days or less but the actual time period for return of the resources or other execution of obligations by the resident or nonresident exceeded 180 days.
The registration requirement does not apply to commercial credits associated with the delivery of goods for which transaction passports have been prepared or to financial credits of resident banks. Previously, a license from the NBK was required for commercial credits by residents to nonresidents in excess of $10,000 for a term of more than 180 days. Registration with the NBK was required when the maturity of the credits was less than 180 days, but the actual time period of the return of the resources exceeded 180 days. The registration did not apply to resident banks. Resident banks must notify the NBK after the fact of financial credits solicited by them from nonresident, if the credit exceeds $300,000.
Commercial creditsControls apply to all these transactions.
Financial creditsControls apply to all these transactions.
Controls on direct investment
Outward direct investmentEffective January 1, 2007, registration with the NBK is required for direct investments in excess of $50,000 (previously, $10,000), except for resident banks, which must notify the NBK of such transactions after the fact.
Inward direct investmentRegistration with the NBK is required for residents to solicit direct investments in excess of $300,000, except for resident banks, which must notify the NBK of such transactions after the fact.
Controls on liquidation of direct investmentNo.
Controls on real estate transactions
Purchase abroad by residentsEffective January 1, 2007, residents must notify the NBK after the fact of foreign exchange transactions associated with the acquisition of ownership rights to real estate if (1) the amount paid to the resident exceeds $300,000 and (2) the amount of transfer of resources to the nonresident exceeds $50,000.
The resident bank effecting the payments and/or transfers must provide notification of payments and/or transfers of money of an individual associated with the acquisition of ownership rights to real estate. Previously, the acquisition by resident legal entities from nonresidents of ownership rights to real estate valued in excess of $10,000 was subject to NBK registration.
Purchase locally by nonresidentsYes.
Sale locally by nonresidentsYes.
Controls on personal capital transactions
Loans
By residents to nonresidentsEffective January 1, 2007, loans in excess of $50,000 (previously, $10,000) for a term of more than 180 days are subject to NBK registration.
To residents from nonresidentsLoans to residents for a term of more than 180 days and in excess of $300,000 are subject to NBK registration.
Transfer of assetsNatural persons are entitled to transfer without restriction their resources abroad or into the country on presentation of documents identifying the purpose of the transfer or completion of a form providing information on the transfer to the NBK and law enforcement agencies.
References to legal instruments and hyperlinksLaw on Foreign Exchange Regulation and Foreign Exchange Control; http://213.211.77.60/cont/publish557033_3640.pdf; Resolution No. 129 of the NBK Board of December 11, 2006, on Approval of Rules for the Performance of Foreign Exchange Operations in the Republic of Kazakhstan; http://213.211.77.60/cont/publish369313_3431.doc.
Provisions Specific to the Financial Sector
Provisions specific to commercial banks and other credit institutionsInvestments abroad by resident banks are limited by requirements regarding the investment of own and borrowed funds in domestic assets.
Banks are prohibited from engaging as a commercial entity in operations and transactions that are not classified as banking activity and are not explicitly stipulated in the Law on Banks and Banking Activity in the Republic of Kazakhstan.
Banks are prohibited from purchasing stakes in the authorized capital or shares of legal entities, with the exception of (1) financial institutions; (2) legal entities that are not financial institutions whose shares are listed in the highest listing category of a stock exchange operating in Kazakhstan; (3) credit bureaus; pawn shops; special financial companies established in accordance with the legislation of Kazakhstan on securitization; special organizations that are located in Kazakhstan and established for the purpose of the placement of securities; leasing organizations, as well as organizations that are engaged exclusively in the ownership and management of real estate used to support the bank’s operating activities; and legal entities engaged in the automation of banking activities; (4) legal entities, if the shares in the authorized capital of these organizations have been accepted as collateral and become the property of banks in accordance with the civil legislation of the Kazakhstan; (5) associations (unions) of banks; (6) joint-stock investment funds that are located in Kazakhstan; and (7) legal entities that are not located in Kazakhstan that have the status of banks, insurance organizations, pension funds, or professional participants in the securities market.
Limits on participation in the authorized capital (purchase of shares) of a legal entity depend on the ratio of (1) the value of the purchase to the bank’s equity capital, (2) the overall value of the bank’s shares in the authorized capital of legal entities to the bank’s equity capital, and (3) the number of shares purchased to the total number of shares placed by the legal entity.
Banks are prohibited from performing transactions with other securities as a form of commercial activity, with the exception of transactions with (1) bonds of legal entities whose securities are listed in the highest and second-highest listing categories of a stock exchange operating in Kazakhstan; (2) bonds of international financial institutions, a list of which is established by the authorized body; and (3) bonds of foreign issuers that have a minimum required rating from one of the rating agencies.
In accordance with the Law on Banks and Banking Activity, banks have the right to perform the following types of professional activities in the securities market: (1) brokerage activity with government securities of Kazakhstan and countries with a minimum required rating from one of the rating agencies or, without such a rating, based on a decision by the authorized body, and derivative securities, a list of which and the procedure for acquisition of the underlying assets of which are determined by the authorized body; (2) dealer activities with government securities of Kazakhstan and countries with a minimum required rating from one of the rating agencies or, without such a rating, based on a decision by the authorized body; derivative securities, a list of which and the procedure for acquisition of the underlying assets of which are determined by the authorized body; and other securities established by Article 8 of the Law on Banks and Banking Activity in the Republic of Kazakhstan; (3) custodial activities; and (4) transfer-agent activities.
The authorized body issues a license for banks to perform one or several compatible types of professional activities in the securities market as listed above. Effective October 1, 2006, changes were made in prudential standards for second-tier banks and the maximum limit for external short-term liabilities (Resolution of the Board of the AFN No. 120 of May 27, 2006).
Lending locally in foreign exchangeAuthorized banks may extend credit in foreign currency to resident and nonresident juridical persons only in noncash form.
Purchase of locally issued securities denominated in foreign exchangeThe securities that banks may purchase are specified in banking legislation.
Differential treatment of deposit accounts in foreign exchange
Reserve requirementsEffective July 1, 2006, foreign exchange deposits are included in the group of liabilities for which banks must meet minimum reserve requirements.
Liquid asset requirementsEffective October 1, 2006, the ratio of the average amount of monthly highly liquid assets of a bank in a foreign currency to the average amount of its monthly demand liabilities in that same foreign currency should be not less than 0.9 (the limit of current foreign exchange liquidity).
Differential treatment of deposit accounts held by nonresidents
Reserve requirementsEffective July 1, 2006, foreign exchange deposits of nonresidents are included in the group of liabilities for which banks must meet minimum reserve requirements.
Investment regulations
In banks by nonresidentsA nonresident bank has the right to open its own representative office without approval from the authorized body. The opening of branches of nonresident banks is prohibited. A nonresident legal entity may obtain consent from the authorized body to acquire the status of a bank holding company or a major shareholder in a bank if it has a minimum required rating from one of the rating agencies. The minimum rating and a list of rating agencies are established by a regulatory legal act of the authorized body. A nonresident bank that has a certain rating from one of the major rating agencies may be a parent bank of a subsidiary bank. A list of the major rating agencies and the minimum required rating are established by the authorized body. Legal entities that are registered in offshore zones or that have affiliates registered in offshore zones, or individuals who are partners in (founders or shareholders of) legal entities registered in offshore zones, a list of which is established by the authorized body, may not directly or indirectly hold, and/or use, and/or determine the disposition of voting shares in resident banks. This restriction does not apply to banks with an individual credit rating no lower than A from one of the rating agencies, a list of which is established by the authorized body. A nonresident that is a founder of a bank must have written notification from the authorized body (for banks that are not located in Kazakhstan, the banking supervision body) of the relevant country indicating that the person is permitted to hold shares in a bank located in Kazakhstan, or a statement from the authorized body (for banks that are not located in Kazakhstan, the banking supervision body) of the relevant country indicating that such permission is not required under the legislation of the country of the founder in question.
Open foreign exchange position limits
On resident assets and liabilitiesThe following limits apply: (1) the long and short open foreign exchange position limits for euros and other currencies of countries with a sovereign rating of no lower than A from Standard & Poor’s (or a similar rating from one of the other rating agencies) should not exceed, effective October 1, 2006, 12.5% (previously, 15%) of a bank’s equity capital; (2) the long and short open foreign exchange position limit for currencies of countries with a sovereign rating below A from Standard & Poor’s (or a similar rating from one of the other rating agencies) should not exceed 5% of a bank’s equity capital; and (3) effective October 1, 2006, the net foreign exchange position limit should not exceed 25% (previously, 30%) of a bank’s equity capital.
Provisions specific to institutional investors
Insurance companiesIt is prohibited to establish branches of a nonresident insurance organization in Kazakhstan, as well as branches of a nonresident insurance broker. A legal entity that is registered in an offshore zone, or a legal entity in whose authorized capital legal entities registered in offshore zones participate directly or through affiliates, may not be a founder of an insurance organization in Kazakhstan. Effective June 1, 2006, changes were made in prudential standards for insurance (reinsurance) organizations (Resolution of the Board of the AFN No. 87 of March 25, 2006).
Limits (max.) on securities issued by nonresidentsThe total amount of an insurance organization’s investment in securities of foreign states, nongovernment securities of nonresidents, and securities of international financial institutions must not exceed 30% of the insurance organization’s total assets.
The authorized body establishes for such securities a list of international financial institutions and rating requirements based on the international credit rating scale, following the Standard & Poor’s, Fitch, and Moody’s Investors Service classifications.
Limits (max.) on investment portfolio held abroadRestrictions are established for securities issued by nonresidents.
Limits (min.) on investment portfolio held locallyEffective June 1, 2006, the requirement that insurance companies invest at least 15% of their assets in government securities in Kazakhstan has been abolished.
Pension fundsThe authorized body establishes a list of financial instruments in which organizations engaging in investment management of assets (pension savings funds) may place pension assets available for investment management for each separate fund, and requirements for them.
Limits (max.) on securities issued by nonresidentsAssets of a pension fund placed in debt securities with a rating below BB- according to Standard & Poor’s or a similar rating by one of the other rating agencies and also in futures, options, swaps, and forwards, whose underlying assets are such securities, should not exceed 5% of the pension assets of that fund.
Limits (max.) on investment portfolio held abroadEffective December 22, 2006, the requirement that investments in securities of foreign states, nongovernment securities of foreign issuers, securities of international financial institutions, and shares in foreign investment funds not exceed 40% of the pension fund’s assets was abolished.
Limits (min.) on investment portfolio held locallyEffective December 22, 2006, the requirement that pension funds invest at least 25% of their assets in government securities of Kazakhstan other than securities issued by local governments and securities backed by government guarantees and deposits was abolished.
Investment firms and collective investment fundsAssets of an investment fund should be not be invested in securities of a single issuer or in financial instruments issued (provided) by a single person in an amount exceeding (1) 15% of the value of net assets for an open or interval mutual fund or real estate fund, (2) 20% of the value of net assets for a joint-stock investment fund or closed mutual fund, and (3) 30% of the value of net assets for an investment fund for high-risk investment.
The authorized body establishes a list of financial instruments in which investment funds may place their assets outside Kazakhstan and requirements for such assets. The requirements established by the authorized body do not apply to high-risk investment funds.
Limits (max.) on securities issued by nonresidentsYes.
References to legal instruments and hyperlinksRepublic of Kazakhstan Law No. 2444 of August 31, 1995, on Banks and Banking Activity; Republic of Kazakhstan Law No. 126-II of December 18, 2000, on Insurance Activity; Republic of Kazakhstan Law No. 136-I of June 20, 1997, on Pension Security in the Republic of Kazakhstan; Republic of Kazakhstan Law No. 461-II of July 2, 2003, on the Securities Market; Republic of Kazakhstan Law No. 576-II of July 7, 2004, on Investment Funds; Resolution of the Board of the NBK No. 38 of May 27, 2006, on Approval of the Rules on Minimum Reserve Requirements; Resolution of the Board of the AFN No. 358 of September 30, 2005, on Approval of the Instruction on Standard Figures and Methodology for Calculating Prudential Standards for Second-Tier Banks; Resolution of the Board of the AFN No. 87 of March 25, 2006, on Approval of the Instruction on Standard Figures and Methodology for Calculating Prudential Standards for Insurance (Reinsurance) Organizations and Forms and Deadlines for Submission of Reports on Fulfillment of Prudential Standards; Resolution of the Board of the Republic of Kazakhstan AFN No. 225 of October 27, 2006, on Approval of Rules for Engaging in Activities for Investment Management of Pension Assets; Resolution of the Board of the Republic of Kazakhstan AFN No. 258 of August 21, 2004, on Approval of Rules for Investing Assets of an Investment Fund Outside the Republic of Kazakhstan.
Changes during 2006
Imports and import paymentsAugust 17. Some import tariff rates were changed.
Exports and export proceedsAugust 17. Changes were introduced in rates of export customs duties applicable on an interim basis for goods produced from oil, and in the list of such goods.
Provisions specific to the financial sector
Provisions specific to commercial banks and other credit institutionsJuly 1. Foreign exchange deposits were included in the group of liabilities for which banks must meet minimum reserve requirements.
October 1. The ratio of the average amount of monthly highly liquid assets of a bank in a foreign currency to the average amount of its monthly demand liabilities in that same foreign currency should be not less than 0.9 (the limit of current foreign exchange liquidity).
October 1. The net foreign exchange position limit was decreased to 25% from 30%.
October 1. Changes were made in prudential standards for second-tier banks and the maximum limit for external short-term liabilities.
October 1. The long and short open position limits for euros and other currencies of countries with a sovereign rating of no lower than A from Standard & Poor’s was decreased to 12.5% from 15%.
Provisions specific to institutional investorsJune 1. Changes were made in prudential standards for insurance (reinsurance) organizations.
June 1. The requirement that insurance companies invest at least 15% of their assets in government securities in Kazakhstan was abolished.
December 22. The requirement that investments in securities of foreign states, nongovernment securities of foreign issuers, securities of international financial institutions, and shares in foreign investment funds not exceed 40% of the pension fund’s assets was abolished.
December 22. The requirement that pension funds invest at least 25% of their assets in government securities of Kazakhstan other than securities issued by local governments and securities backed by government guarantees and deposits was abolished.
Changes during 2007
Resident accountsJanuary 1. Residents are free to open accounts with nonresident banks.
Nonresident accountsJanuary 1. Nonresidents may open foreign exchange and domestic currency accounts with authorized banks without restrictions.
Imports and import paymentsJanuary 1. All advance payments are allowed without restrictions.
January 1. Presentation of an import contract or other supporting documents is required for effecting import payments.
January 1. A transaction passport must be completed for accounting purposes only for each import transaction valued in excess of the equivalent of $10,000 with the servicing bank.
January 1. Deferral of payment on imports or advance payment on imports is considered a commercial credit. A resident importer must register a commercial credit with the NBK in specified cases.
Exports and export proceedsJanuary 1. The time limit for the repatriation of export proceeds was changed from 180 days to the time period stipulated by the terms of the transaction.
January 1. A resident exporter was allowed to register a commercial credit with the NBK in specified cases if a resident made early delivery on export valued in excess of the equivalent of $50,000 more than 180 days before the payment date.
January 1. The export contract must be presented only to the bank servicing the transaction (previously, to the customs authorities also).
January 1. A transaction passport must be completed for accounting purposes for export transactions involving the movement of goods valued in excess of the equivalent of $10,000 only for the bank servicing the transaction (previously, to the customs authorities).
January 1. Deferral of payment on exports or advance payment on exports is considered a commercial credit.
Payments for invisible transactions and current transfersJanuary 1. Deferral of payment or advance payment on services provided by a nonresident is considered a commercial credit.
January 1. No prior approval is required for advance payment for services by nonresidents in an amount in excess of $10,000, if delivery of the services is deferred for more than 180 days.
Proceeds from invisible transactions and current transfersJanuary 1. The time limit to repatriate proceeds from the export of services (work) was changed from 180 days to the time period stipulated by the terms of the transaction.
Capital transactions
Controls on capital and money market instrumentsJanuary 1. Residents must notify the NBK after the fact of foreign exchange transactions associated with the acquisition of shares or other securities of a participating nature that exceed $50,000 (for securities issued by nonresidents) or $300,000 (for securities issued by residents).
Controls on derivatives and other instrumentsJanuary 1. Residents must notify the NBK after the fact of foreign exchange transactions associated with derivative financial instruments, if the amount of the payment and/or transfer by the resident to a nonresident and/or nonresident to a resident exceeds $50,000.
Controls on credit operationsJanuary 1. Registration with the NBK is required for credits for a term of more than 180 days in excess of $50,000 by residents to nonresidents and $300,000 to residents from nonresidents.
Controls on direct investmentJanuary 1. Registration with the NBK is required for direct investments in excess of $50,000 (previously, $10,000), except for resident banks, which must notify the NBK of such transactions after the fact.
Controls on real estate transactionsJanuary 1. Residents must notify the NBK after the fact of foreign exchange transactions associated with the acquisition of ownership rights to real estate, if (1) the amount paid to the resident exceeds $300,000 and (2) the amount of transfer of resources to the nonresident exceeds $50,000.
Controls on personal capital transactionsJanuary 1. Personal loans by residents to nonresidents in excess of $50,000 (previously, $10,000) for a term of more than 180 days require NBK registration.

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