Business in Kazakhstan

The National Entrepreneurship Development Project for 2021-2025

The National Entrepreneurship Development Project for 2021-2025 was approved in October 2021.

The national project is aimed at creating a competitive SME sector, increasing the economic activity of entrepreneurs and creating equal conditions for business entities.

The implementation of the National Project is carried out in 4 directions:

• increasing entrepreneurial activity,
• acceleration of the growth of entrepreneurs,
• formation of new niches,
• comprehensive development of competition.

The national project is aimed at:

• creating conditions for opening and developing your own business;
• support for entrepreneurs through the organization of subsidized jobs and the development of skills to meet the needs of entrepreneurs;
• increasing the availability of financing for business entities;
• denationalization of the economy.

Doing business in Kazakhstan

You can start a business from scratch. Where and how to start? Where can I get money to start? First, it is to be understood what you should do to start making earnings – provide services or goods? Today, not only ready-made products are in great demand, but also personal knowledge, skills, talents and experience. First, it is needed to start with your strengths, the things you have known the best of all, for example, a teacher can open an educational center, and an accountant can help with accounting and audit of companies. Second, you will need to study a certain market, understand the market needs, study the proposals of competitors and offer your new service (for example, if there is no coffee shop within walking distance, you can offer barista services by investing in a coffee machine). If you have already decided on a niche, you need to develop a business plan (provide all the necessary points, calculate the costs to implement the idea). In the beginning you can work from home without renting an office space. For example, you can turn your hobby into a business (baking, embroidery, etc.).

Types of entrepreneurship

Before starting your own business, you need to decide which form of business to choose. To do this, you need to understand what business you are going to do - trade, education, accounting, etc. One of the forms of entrepreneurial activity is Individual Entrepreneur (IE). It is easy to become an individual entrepreneur in Kazakhstan, you do not need to go anywhere for this, it is enough to send a notification to the state revenue authorities about the start of activities as an individual entrepreneur. It is possible to submit a notification through gov.kz portal. In addition, at present, it is possible to submit a notification through mobile application of the second-tier banks, while an IE registration service is carried out through state information system e-license.kz. Individual entrepreneurship is carried out in the form of personal or joint entrepreneurship. It should be noted that in addition to the citizens of the Republic of Kazakhstan and ethnic Kazakhs (“kandas”), citizens of the EAEU countries (RF, Tajikistan, Kyrgyzstan, Belarus, Armenia) who permanently reside in the Republic of Kazakhstan have the right to carry out individual entrepreneurship. You can find out more about individual entrepreneur registration here.

If you decide to conduct your business with a partner, an acquaintance, a friend with whom you jointly invest your money, knowledge and you start your own business, then for a joint business it is better to open a Limited Liability Partnership (LLP). This is the case when your business articles of incorporation will be required. Without this document, you will not be able to maintain a bank account and receive public services. This means that you will not run the business. But, in the case you decide to register LLP it is not required to have articles of incorporation in place. 

An LLP can be engaged in any services, it can also be engaged in both the services, processing and production. There are only certain activity types that require the receipt of additional licenses. For example, if you decide to be engaged in the construction of buildings or sale of alcoholic beverages, in this case, you need to obtain a license in addition to your LLP to carry out the business activity. To open a limited liability partnership, you also need an authorized capital. It is found upon contributions of each of the LLP founders and thus their share in the company equity is determined. There is a restriction to pay from the equity capital towards the purchase of raw materials, rent, public utilities and other expenses. This is an untouchable amount. Even in the time of crisis, the equity capital must be held on the LLP account. It serves as a security deposit and is withdrawn in the case of company liquidation. The money can go to pay off the debts and other liabilities once the LLP is recognized as a bankrupt. More information about the establishing and closing of LLP can be found here.

Taxation regimes for small businesses

A taxation regime stated during registration of business is determined by business activity regime. There are several taxation regimes in our country, after choosing one of them, a small business entity is registered. Let us list the main two: a generally established taxation regime and special tax regimes.

Generally established regime. A small business entity that applies generally established taxation regime, each year (until March 31 of the next year) shall submit an individual income tax report. A net income is stated in the tax report ("income" minus "expenses") received during reporting period, which is a subject of individual income taxation at the rate of 10%. That is, in the generally established regime, we take our turnover - we take away all the official costs and expenses that were incurred for the business - this is the purchase of goods, salaries, rent of premises, telephone communication, everything that can be documented, all this can be your cost items and you pay tax 10%, but from the net income! We pay the tax once a year. It is also necessary to keep accounting records in 1C system.

In Kazakhstan, in order to support small businesses, the Tax Code provides for a special tax regime for small businesses.

This mode is sub-divided into the following types:

• on the basis of a patent;
• based on a simplified declaration;
• using a fixed deduction.

To apply a special tax regime for small businesses, certain restrictions have been established on the number, turnover and types of activity.

Let us dwell on each type of special tax regime.

A special tax regime based on a patent is intended only for such a type of entrepreneurship as an individual entrepreneur, which does not use hired workers and carries out the types of activities provided for by the list (18 types). The peculiarity of the patent is that the IIT is calculated at the rate of 1% of the estimated income, that is, the entrepreneur pays taxes in advance.

The next type of taxation is a special tax regime based on a simplified declaration. It is applied by taxpayers who meet the following conditions: number of employees for the period - up to 30 people; the income for the tax period does not exceed 24 038 MCI. The individual income tax rate is 3% of income (excluding expenses), this regime differs in that the tax is paid on the entire turnover without taking into account any costs incurred. The tax report is provided once every six months. The regime is used mainly by the taxpayers doing trade, catering, and other types of services.

 And the third type of special tax regime is a special tax regime using a fixed deduction. There is an additional fixed deduction of 30% of the total annual income, without supporting documents, as well as a 200% reduction of the payroll. For this regime, higher (in comparison with the simplified declaration) criteria for the size of the maximum income 144 184 MCI and the maximum number (50 people) have been established.

The regime is mainly applied by the taxpayers who carry out wholesale and retail activities, provide other types of services, and also work in the construction sector.

Whichever tax regime you choose, you must have a cash register. In case of payments in cash and bank cards for the purchased goods, works, services, it is mandatory to use a cash register. In simple words, if in your activity you plan to receive payment in cash, as well as by bank cards, for the goods sold, services rendered, work performed, then you need to purchase and register a cash register with the tax authority.

The cash register must be purchased BEFORE making payments, i.e. at the time of receipt of payment from buyers, you must already have a cash register registered with the tax authority. The cash registers are of two types. An ordinary cash register for cash, and a mobile cash register in the form of an application on the phone.

Outsourcing

For a successful business, you need to study all the processes from the inside. The ideal business model is when you do what you have known the best, where you have professional experience, where you are talented. That's why if you do not have the opportunity to assemble a good team yet, various mobile applications and online tools - platforms can help. You can also use external resources for this - outsourcing.

In simple words, outsourcing is the transfer of part of the company's responsibilities to another firm that specializes in providing services on the basis of a contract. The word comes from the English words ‘out’ and ‘source’.

If an entrepreneur makes good the production (baking, embroidery), the sales, advertising and accounting can be outsourced to other companies. A businessman pays them for the result. He doesn't rent a room, pay salaries, just pay for the result.

Every day applications are issued, some services through which it is easy to do business. Now there is such an opportunity as creating a telegram bot, a WhatsApp bot, clients write and the robot automatically answers. Basically, the questions are typical and the answers are also typical and this will allow, for example, reducing the staff, time of customer service, and this is very convenient for the client.

You can start a business with grants from the state

There are training programs for novice businessmen, there is a training program for business, that is, if the entrepreneur does not understand, for example, SMM or accounting, etc., you can get training on the portal.

The Atameken National Chamber of Entrepreneurs, within the framework of Enbek state program, has been implementing the Bastau Business project since 2017, which is aimed at teaching the population with entrepreneurial skills, as well as supporting their business projects. Under this program, there is a 3 weeks training on the basics of entrepreneurship, and after that there is a chance to receive either a grant of 200 MCI or a loan at a preferential interest rate: 6% per annum. The Bastau Business project includes a set of measures to support start-up entrepreneurs in rural areas and small towns. It is one of the most effective tools that provides business principles training, assistance in developing business plans and business consulting in close connection with loan and grant programs. Also, the project provides for the support of implemented projects. To carry out the training process and support the participants, about 200 business trainers are annually involved in the project. As a result of training, students who have defended their business project receive a "Certificate of Completion of Training".On behalf of the 

The National Chamber of Entrepreneurs "Atameken" has also built and maintained the Register of domestic producers of goods, works and services registered in the territory of the Republic of Kazakhstan. An industrial certificate is issued to a domestic manufacturer. To apply to be registered in the Register, you must register on the website doculite.kz, in your personal account, submit an application and a package of documents to the Regional Chamber of Entrepreneurs based on territorial location of production. The manufacturer will have been included into the Register for 3 years with the possibility of prolongation.

Currently, there is another program to support entrepreneurship. This is the Business Roadmap - 2025, according to which it is also possible to receive a grant for innovative activities of up to 5 million tenge. The grant is gratuitous, irrevocable, but it is targeted. It needs to be used exactly for the purposes that were indicated in the business plan. You will need to register on the qoldau.kz website.

Measures of non-financial support for entrepreneurs

There are preferential lending programs for businessmen. The state actively supports start-up entrepreneurs. In NCE "Atameken" there is also such a service as "non-financial support measures" (this is a service center for entrepreneurs who are located in all cities of republican significance). For example, an entrepreneur who has a very small team can come to the service center, receive the services, where he is consulted on taxation, and submit reports. This is all done with 3 tools:

The tool "doing business service support provision" (Service support) is carried out in 19 business service centers (BSC) in the offline mode through regional chambers of entrepreneurs in regional centers, the cities of Astana, Almaty, Shymkent, Semey and at the branches of the Chamber of Entrepreneurs regions in monotowns, small towns and district centers in the BSC, a branch of BSC, as well as online through the web portal of the operator of non-financial support.

The tool "Information support of the population and entrepreneurs" (Information support) is carried out in 190 BSCs in monotowns, small towns and regional centers. The information support services are provided to the existing and novice entrepreneurs, as well as to the population with an entrepreneurial initiative, free of charge, offline and/or online.

The Business Relations tool is provided to the top and middle managers of small and medium-sized businesses operating in the economy priority sectors within the framework of the Program.

The Business Relations tool has two stages.

The first stage is carried out on the territory of Kazakhstan. At this stage, in-service training of senior and middle managers of small and medium-sized businesses operating in the economy priority sectors within the framework of the Program is being carried out by organizing business trainings aimed at teaching with modern methods of entrepreneurship, marketing, establishing business contacts with business partners and others. In the process of training, the participants of the tool develop business plans for their enterprise under the guidance of foreign and domestic business trainers.

Upon completion of business trainings, the participants of the tool independently finalize business plans, in accordance with the consultations received, and subsequently can participate in the competitive selection for the second stage of the tool "Establishing business relations with foreign partners".

The second stage provides for the participants of the tool a thematic business internship abroad and includes internships at foreign enterprises of a similar profile and the establishment of business relations with foreign partners.

The Women’s Entrepreneurship Development Centers

There 17 Women’s Entrepreneurship Development Centers (WEDC) that have started to working under NEC of the RK "Atameken" in all the regions of the country from November, 2021. The centers are being funded by Asian Development Bank under auspices of Solidarity Fund for Kazakhstan to fight against COVID -19 pandemic and implemented by NEC of the RK "Atameken" in partnership with the UN Development Program in Kazakhstan.

Specific feature of the Centers is that women entrepreneurs and women with entrepreneurial initiative can submit an application for counseling, training, mentoring under the needs identified.

The centers are aimed at empowering the women in the business management, including their personal development, creating an enabling environment for inclusive, resilient and sustainable economy development as well as ensuring gender equality and empowerment of all women.

The WEDC provides non-financial services (such as training according to needs assessment, involving qualified specialists, counseling, mentoring, networking etc.) aimed at the women of two categories:

- women with entrepreneurial initiative (assistance in raising their awareness, provision with the necessary information, guidance and counseling in the beginning of their entrepreneurial activities);

– current entrepreneurs (provision of support to the established women entrepreneurs in developing their business, especially in the rural areas).

Based on the Centers objective and tasks, the women can receive 7 service types including training (vocational training, social entrepreneurship, cooperation, crowdinvesting), mentoring, business valuation, information and participation in women's communities, equipment selection counseling.

In the Centers there are convened weekly trainings and master classes for the development of business competence and personal women growth, as well as the following courses were arranged: SMM marketing, social entrepreneurship, vegetable growing and creation of cooperatives.