COVID-19 in Kazakhstan Legal Q&A

In the wake of the COVID-19 outbreak, on 16 March 2020, the President of the Republic of Kazakhstan declared a state of emergency that continued until 11 May 2020.

Like most of other states, Kazakhstan imposed a host of restrictive measures, in particular, border closure, business interruption, travel restrictions and control over circulation of certain goods.

Despite the fact that the state of emergency was lifted throughout the country on 11 May 2020, certain restrictions remain in effect (e.g. bank account withdrawal limits for corporate entities, in particular, 20 mln tenge per calendar month for small businesses, 120 mln tenge per calendar month for midsize businesses, and 150 mln tenge per calendar month for large businesses; restrictions on the operation of large-scale shopping centres; restriction of immigration, etc.), and it cannot be ruled out that, at some future time, the emergency rule is put back in place.

Obviously, the imposed restrictions slowed the spread of the COVID-19, although they caused substantial financial losses to businesses operating in Kazakhstan.  In an effort to alleviate the plight of Kazakhstan entrepreneurs, the Kazakhstan Government has taken a number of steps to get business off the ground, in particular, moratorium on audit of small and micro businesses; extension of time to file certain returns and statements; indexation of pensions and allowances; financial aid and income support for Kazakhstan citizens, etc.).

In the array of business support measures we would like to highlight the following most important amendments to Kazakhstan tax law:

1.     exemption from the following taxes through the end of 2020:

   ✓  tax on property of legal entities and sole traders in relation to large-scale trading facilities, shopping and recreation centres, cinema halls, theatres, exhibitions, health and fitness facilities, and sports facilities;

   ✓  land tax in relation to agricultural lands of agricultural producers;

   ✓  individual income tax on sole traders taxable under the generally established tax regime [please note that the taxpayers qualified by the Kazakhstan Entrepreneurial Code as micro, small and midsize businesses have been granted a grace period for paying all kinds of taxes and obligatory payments to the budget, including social insurance charges, until 1 June 2020];[1]

2.     8% VAT rate in relation to the sale and import oflistedstaple foods until 1 October 2020;

3.     exemption of the producers of goods excisable in Kazakhstan from excise tax in relation to the exported gasoline (except aviation gasoline) and diesel fuel; and

4.     exemption from tax on property of legal entities and sole traders in relation to the taxable properties used for tourism, public catering and hotel business purposes through the end of 2020.

Apart from the above, other business concerns amid the COVID-19 crisis include the performance of contractual obligations, defaults and implications thereof.  In that respect please see below our answers to the most frequently asked questions based on the opinion of the Kazakhstan Supreme Court set forth in Explanatory Note 1Concerning Certain Issues of Litigation Practice Arising during the State of Emergencyadopted on 6 May 2020 by Resolution No. 9 of the Plenary Session of the Kazakhstan Supreme Court.

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Frequently Asked Questions

Question 1: May the state of emergency (hereinafter referred to as the “SoE”) declared by the Kazakhstan President on 16 March 2020 in response to the COVID-19 outbreak be deemed as force majeure?

Answer: Yes, indeed, the SoE declared in Kazakhstan may be deemed as force majeure.  However, it should be noted that the SoE does not fully relieve the parties of their contractual obligations; therefore, we would recommend considering more closely the relevant mechanisms provided by specific contracts especially for such occasions.

Question 2: Is it a must to apply to court for the recognition of the SoE as constituting force majeure, i.e. recognitionde jure?

Answer: No, there is no need to apply to court for the recognition of the SoE as a force majeure event.

Question 3: Would a contracting party be relieved of liability for nonperformance or improper performance of their obligations under the contract if such nonperformance/improper performance is caused solely by the declared SoE?

Answer: A contracting party would be relieved of any financial liability (e.g. damages or penalties) only to the extent attributable to force majeure, namely, the measures taken to curb the COVID-19 outbreak during the SoE.

Question 4: Should the contracting parties follow the pre-trial or out-of-court settlement procedure when one of the parties fails to perform their contractual obligations because of the SoE?

Answer: Under certain circumstances, the governing law, the contract itself or customary business practices require that the parties follow the pre-trial or out-of-court settlement procedure.  The declaration of the SoE does not relieve the contracting parties from fulfilling the requirement, unless such opportunity is lost.

Kazakhstan courts may dismiss claims when the contending parties do not follow the pre-trial or out-of-court settlement procedure, provided that such opportunity is not lost.

Question 5: How does the SoE affect the calculation of statutes of limitations, i.e. the maximum time period within which a claim arising from an infringement of a statutory right or interest may be satisfied?

Answer: The SoE suspends statutes of limitations for the period during which the SoE exists.

Question 6: How does the SoE affect the extension and reinstatement of procedural time limits?

Answer: The time limits for filing statements of claim (applications), appeals, complaints and petitions for review of finally adjudicated cases in cassation proceedings, as well as any other procedural time limits missed during the SoE may be extended or reinstated by court, for which purpose the interested party should apply to the respective court which was supposed to perform the respective procedural action (e.g. to consider a complaint, to issue a judgment, etc.).  Such application must be filed within one month from the date when the party became aware of the violation of their statutory rights or interests.

Question 7: May the deadline for performance of obligations be postponed if the delay in performance is caused by the SoE?

Answer: When an obligation is not performed due to a force majeure event, the interested party may claim for the postponement of the deadline for performance of such obligation in the manner prescribed by Chapter 24 of the Kazakhstan Civil Code (Contract Change and Termination).

Question 8: May Clause 9-1 of Kazakhstan Government ResolutionOn Establishment of a Special Public Procurement ProcedureNo. 127 of 20 March 2020 (the “Resolution”) be used as a statutory ground for rejection of claims?

Answer: Kazakhstan civil procedure law does not explicitly provide for possible rejection of claims against suppliers who do not perform or improperly perform their obligations under public procurement contracts due to the SoE.

Nevertheless, according to Clause 9-1 of the Resolution, when the potential supplier awarded a public procurement contract tries to avoid entering such contract or does not perform or improperly performs its contractual obligations due to the SoE, the customer shall not initiate measures for inclusion of such potential supplier in the register of mala fide suppliers or apply sanctions thereto.  The Resolution prohibits the customer from filing claims for (i) the qualification of a supplier as a mala fide supplier, or (ii) for application of sanctions to such supplier.  Should the customer file any of such claims, the judge shall reject the claim as non-justiciable.  The construction is rather broad; however, in the SoE, it is ubiquitously applied.

Question 9: How does criminal procedure apply the provisions of the Decree of the Kazakhstan PresidentOn the Revised 2020 State Budget(the “Decree”), in particular, the new monthly calculation index effective 1 April 2020?

Answer: All criminal proceedings should be based on the KZT2,778 monthly calculation index (the “MCI”) fixed as at 1 January 2020 by the Decree published on 9 April 2020.

Therefore, when a court decides on the appropriate punishment in the form of a penalty or corrective labour, and when a court determines the amount of involuntary contribution to the Fund for Compensation of Crime Victims in relation to the crimes committed during the period from 1 January 2020 through 8 April 2020, the court should apply the MCI which had been in effect prior to 1 April 2020 (i.e. KZT2,651).  However, when a court qualifies a crime committed on or after 1 April 2020 under the respective article of the Special Part of the Criminal Code or when the Decree improves the position of the defendant, the court should apply the MCI established by the Decree (i.e. KZT2,778).

Question 10: Does corpus delicti arise when a Kazakhstan citizen stays abroad without their ID or with an invalid ID or without permanent/temporary residency/stay registration for a period from 10 calendar days to 1 month, or when a Kazakhstan citizen drives a car without a driving license and other appropriate documents (ID, driving license, etc.) the validity period of which has expired during the SoE?

Answer: All proceedings in connection with the documents expired during the SoE should be terminated due to the absence of corpus delicti, provided that the format of a certain document issuance requires the physical presence of the interested party and that such document cannot be obtained through

Question 11: What is the procedure for the termination of administrative proceedings connected with a violation of the SoE order after the SoE is lifted?

Answer: The Supreme Court of the Republic of Kazakhstan upholds the position that no administrative proceeding should be instituted and, if already instituted, such proceeding should be terminated (provided that no procedural decision has been made) after the SoE is lifted on the ground that the law or certain provisions thereof imposing administrative liability have been abolished.


* The term “small business” applies to unincorporated and incorporated sole traders whose annual average number of employees does not exceed 100 people and annual average income does not exceed 1.9 mln US dollars.

* The term “micro business” applies to private small businesses whose annual average number of employees does not exceed 15 people and annual average income does not exceed 198 K US dollars.

* The term “midsize business” applies to those sole traders and business entities which do not subsume into small or large businesses.