Kazakhstan, Uzbekistan, and Kyrgyzstan are among the most attractive countries in Central Asia for foreign investors. These nations are actively developing investment infrastructure, offering tax incentives, and providing legal mechanisms for asset protection. However, despite improvements in the investment climate, investors must consider the legal specifics of each country. This article outlines key legal aspects of investing in Kazakhstan, Uzbekistan, and Kyrgyzstan.
Meruet Zhunubayeva, Managing Partner at Astrea KZ, an expert in M&A, international taxation and corporate law,
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Main forms of business operations
Investors can choose from several legal forms to conduct business in these countries:
1. Establishing a legal entity: LLP, LLC, JSC — the most common option, ensuring full control over assets.
2. Joint venture — a partnership with local companies, facilitating market access and reducing risks.
3. Representative office or branch — a convenient format for market testing and contract execution.
4. Investment agreements and concessions — in some cases, government programs provide special conditions for foreign investors.
Regulation of foreign investments
Laws governing foreign investments and their protection vary by country:
1. Kazakhstan — Investment matters are regulated by the Entrepreneurial Code of the Republic of Kazakhstan, which provides measures for investor protection and support.
2. Uzbekistan — The Law "On Investments and Investment Activities" establishes legal guarantees, tax incentives, and mechanisms for resolving investment disputes.
3. Kyrgyzstan — The Law "On Investments in the Kyrgyz Republic" provides protection for foreign investors, including access to international arbitration.
Investment guarantees and asset protection
To protect investments, these countries offer the following mechanisms:
1. Protection from expropriation — national laws safeguard investors from unlawful asset seizures.
2. Free capital repatriation — the ability to transfer profits and capital without restrictions.
3. Access to international arbitration — Kazakhstan, Uzbekistan, and Kyrgyzstan are signatories to the ICSID Convention and the New York Convention.
4. Bilateral Investment Treaties — establish special protection regimes for investors.
Tax and customs incentives
Many countries in the region offer tax incentives for foreign investors, depending on the industry:
1. Special Economic Zones with simplified taxation.
2. Exemptions from VAT and customs duties on imported equipment.
3. Corporate tax and dividend tax benefits.
Choosing jurisdiction and legal structure
Before structuring investments, investors should assess:
1. The availability of international arbitration for dispute resolution.
2. The possibility of signing an investment agreement with the government.
3. The corporate structure for asset ownership, e.g., through holding companies in jurisdictions with investment treaties.
4. In Kazakhstan, investors can use the Astana International Arbitration Centre under the Astana International Financial Centre, which operates under English law and provides additional guarantees for investor protection.
Investing in Kazakhstan, Uzbekistan, and Kyrgyzstan requires a thorough understanding of the legal environment, selecting the optimal business structure, and implementing asset protection mechanisms. Legal support during the structuring and management of investments will help minimize risks and maximize available benefits. Potential investors are advised to seek assistance from international legal experts and local specialists for effective protection of their interests.
I have extensive experience in M&A and business structuring across Central Asia. If you need assistance in structuring investments or protecting your assets, I am ready to provide qualified legal support.
