At the Government session on August 20, Kairat Kelimbetov Governor of the Astana International Financial Center (AIFC), spoke about the main results of the centre’s activities, as well as reported on its further development prospects & press service of the Prime Minister of Kazakhstan reported.
In Kelimbetov’s words, the number of registered enterprises of the AIFC regulator increased to 235 companies from 26 countries (USA, UK, Switzerland, China, Hong Kong, etc.), including such large financial institutions as the China Development Bank, China Construction Bank and the largest investment banks Wood & Co (Czech Republic) and CICC (Hong Kong), and by the end of 2020 their number will increase to 500.
The work of the AIFC Exchange was launched in November 2018. The global financial Industry leaders; the Shanghai Stock Exchange, the Nasdaq American Exchange, the Silk Road Fund and the largest US investment bank Goldman Sachs have become strategic partners and shareholders of the Exchange, providing access to investment liquidity in these vast regions, including through the Belt & Road Initiative.
In less than a year of operation of the AIFC Exchange, the amount of equity capital raised amounted to more than $70 million. For the 1st half of 2019, the total capitalisation of the AIFC Exchange’s stock market amounted to $1.9 billion.
AIFC, together with the EBRD, will continue the project to develop the country’s capital market and upgrade its status in the global MSCI index to the level of countries with developing economies.
In order to facilitate the transition to a green economy and sustainable growth, AIFC promotes the development of green finance on its site. Together with the EBRD, a fundamental basis has been adopted the Concept of a green financial system for Kazakhstan, the AIFC Strategy in its implementation, as well as the Rules for issuing green bonds on the AIFC Exchange.
As part of digitisation, at the beginning of this year, the eJustice online dispute resolution system, unique for the region, was launched, allowing parties to disputes to file an action with the AIFC Court in electronic form from anywhere in the world.
All this allowed the AIFC to take 51st place out of 102 in the prestigious Global Index of Financial Centres and 1st place among the financial centres of Eastern Europe and Central Asia, ahead of Istanbul, Warsaw, Budapest, Moscow, and Baku.
At the same Government meeting, First Deputy Minister of Finance Berik Sholpankulov introduced a bill on amendments to the AIFC Constitutional Law.
The proposed amendments can be divided into 2 blocks: investment tax residency and clarifying standards related to the AIFC activities.
In Sholpankulov’s words, the investment residency program is a fairly common phenomenon in the modern world.
Today, there are more than 80 similar programs that offer two types of residency programs. The first type is the programs implemented in countries such as the USA, Canada, Spain, as well as Latvia and Greece, in which they provide a residence permit in exchange for investment. The second type of program involves obtaining an investment visa and tax residency of the country (that is, an investment tax residency program). Such countries are Italy, Switzerland, Cyprus and the United Kingdom.
In Kazakhstan, it is proposed to apply the second type of program investment tax residency.
The bill provides for the introduction of the concept of “investment resident” and the program of “investment tax residency.”
The tax residency program is approved by the AIFC act, but will be agreed upon with authorised state bodies, particularly the Ministries of National Economy, Foreign and Internal Affairs, as well as the National Security Committee.
The program will determine the volumes and instruments of investment, and procedures for obtaining investment tax residency.
The main concept of the investment tax residency program is to attract investments in exchange for the receipt by investors and their family members of a multiple entry visa to Kazakhstan.
Potential investors will invest their funds in financial instruments and securities traded on the AIFC exchange.
Also, the bill for investment tax residents proposes exemption from the payment of individual income tax on income from sources outside Kazakhstan.
In this case, income obtained within Kazakhstan will be taxed in accordance with the Tax Code, and income of foreign origin will not be taxed.
This measure is aimed at investors seeking to optimise their tax expenses, thereby increasing the investment attractiveness of the country. “The launch of the investment residency program in Kazakhstan should bring significant investments in the long term,” Sholpankulov said.