Establishment of a branch or representative office of a Russian company on the territory of the Republic of Kazakhstan. How to register a business without problems?

Oct, 10 2022

Contents:

Kazakhstan is one of the most popular destinations for relocating your own business from Russia to another country. Recently, such a step has become especially relevant for companies working in the field of international trade – exporting and importing goods from or to the Russian Federation, as well as looking for a reliable territory for transit.

Why should Kazakhstan be the one to pay attention to among the extensive list of countries?

  • Has a rapidly developing economy.
  • Like Russia, it is a member of the Eurasian Economic Union, which allows our citizens to receive certain preferences when doing business.
  • Simple and clear tax policy: it is possible to work within the simplified taxation system.
  • Good location. Kazakhstan is considered a trade gateway between Europe and Asia, which makes it convenient to transport goods between these continents.

As for the form of business organization on the territory of the state, Russian investors in Kazakhstan have the right to open two types of companies – a limited Liability partnership (an analogue of a Russian LLC) or a branch (representative office) of a domestic company abroad. In this material, we will analyze in detail these forms of doing business.

LLP and branch: what are the differences?

Legal practice shows that corporations or smaller companies that face issues of expanding their business cannot determine the type of separate unit that needs to be opened in another region of work. First of all, the choice is between the registration of a separate legal entity or the creation of a subsidiary company, which will depend on the “parent”. To bring more clarity to this topic, we will tell you in detail about the differences between the work of an LLP and a representative office in the territory of the Republic of Kazakhstan.

So, among the features of a limited Liability Partnership, one can distinguish:

  • An LLP can be opened by one or more founders. In the second case, the authorized capital will be divided into several equal or unequal shares in proportion to the amount of investments.
  • Members of the LLP will be liable for the obligations of the company they created and bear subsidiary liability for possible losses that may arise in the course of economic activity.
  • If a member of the LLP has only partially contributed the amount to the account of the authorized capital of the company, then his liability will be determined as joint and several. This means that the creditor can make a claim for the fulfillment of obligations on part of the debt.
  • The legislation of the Republic of Kazakhstan does not set a limit on the number of LLP participants.
  • Regulatory legal acts of Kazakhstan prohibit having another legal entity as the sole founder of an LLP.
  • When registering an LLP, the founder can make any contribution to the authorized capital of the company, however, the total amount should not be lower than the minimum established value of 100 monthly calculation index (MPR). Currently, one unit is equal to 3,200 tenge (400 rubles). Accordingly, the minimum size of the authorized capital is 320 thousand tenge (40 thousand rubles).
  • Depending on the number of staff units and annual income, the LLP will have to obtain the status of a small, medium or large entrepreneur, which will further affect the payment of taxes.

In turn, a branch is a separate division of a domestic corporation, the location of which is located in another region – different from the location of the parent company. At the same time, the branch performs only partial functions of the main firm, protecting and representing the interests of the main legal entity. Representative offices and branches have many similar features. The only difference in their organizational and legal form is that a branch can organize its own production on the territory of another country, while a representative office performs only a representative function.

The main feature of opening a branch of a Russian company in Kazakhstan is its registration without acquiring the right of a legal entity.

Procedure for opening a Limited Liability Partnership on the territory of Kazakhstan

In order to register their own company within the Republic of Kazakhstan, a Russian investor must apply to the registration authority with the following set of documents:

  • A statement written in a special form.
  • Constituent papers, which include the charter of the company and the minutes of the general meeting of owners on the opening of the LLP.
  • A payment document confirming the payment of the state fee for large business entities. Companies from the small or medium segment are exempt from this obligation.
  • A photocopy of an extract from the commercial register (for small and medium-sized businesses). It is provided with a notarized translation.
  • A photocopy of the passport of the foreign founder or other document confirming his identity (for small and medium-sized businesses). It is provided with a notarized translation.

It is important to take into account that registration of a new LLP in the territory of the Republic of Kazakhstan is impossible without obtaining an individual identification number (IIN) by the General Director – an analogue of the Russian TIN. This must be done before the company is registered, since the IIN of the head is indicated when submitting documents. The IIN is produced in a fairly short time – within three working days after submitting the relevant application.

The new Limited Liability Partnership will also be registered in a short time – within three working days from the date of submission of the full package of documents.

Procedure for opening a representative office of a Russian company in Kazakhstan

In order to register a separate structure dependent on the parent company, in the territory of the republic, the state authorities should submit:

  • An application in a form specially prescribed by law, where the signature of the head of the main legal entity must be present, as well as the seal of the parent company.
  • A payment document confirming the payment of the registration fee.
  • Protocol of the company’s decision to establish a branch or representative office in another country.
  • Regulations on the structural unit.
  • General power of attorney issued by the owners of the main corporation. This document entitles the director to manage the branch and carry out activities in another region.
  • A legalized extract from the commercial register with the presence of a translation certified by a notary.

The term of state registration of a branch or representative office of the company in the Republic of Kazakhstan is three working days from the date of receipt of the full package of documents.

The cost of opening a structural unit on the territory of Kazakhstan

As we noted earlier, when registering an LLP or representative office, it is necessary to pay a registration fee, the amount of which directly depends on the company’s affiliation to a small, medium or large business entity.

Thus, for small and medium-sized businesses, there are preferences that exempt management from paying the registration fee. Representatives of large businesses are required to pay 6.5 MPR (approximately 2,600 rubles) to the treasury.

The company’s affiliation to a particular entity is determined by the average annual number of employees, as well as the average annual income expressed in MPR. It is also important to take into account that according to the legislation of Kazakhstan, a company does not have the right to treat a small business if it works in the field of psychotropic substances turnover, wholesale sales, agricultural activities, lotteries and other gambling, turnover of radioactive and other hazardous materials, banking and insurance, consulting and legal services, auditing and brokerage, as well as security and other areas related to the legal carrying or sale of weapons.

Our experience shows that most business leaders in Russia face difficulties when opening a separate division in Kazakhstan. VALEN’s experienced team of lawyers is ready to advise you on setting up your business in Kazakhstan to simplify and speed up the process of registering a company or its representative office.

Question and answer

How to make Kazakhstan’s IIN and EDS to an individual who is located on the territory of Russia?

IIN and EDS can be obtained remotely, for this it is enough to make a notarized power of attorney for our employees in Kazakhstan and they will issue these documents on your behalf.
Apostille affixing on documents is not required.

Is it necessary to notify the Russian tax authorities about the opening of a branch or representative office outside the country?

Article 23 of the Tax Code of the Russian Federation does not establish the obligation to inform about the opening of a branch or representative office of a company outside the Russian Federation.

What VAT will I pay when exporting goods from Russia to Kazakhstan?

In accordance with the provisions of the Agreement on the Principles of Levying Indirect Taxes on the Export and Import of Goods, Performance of Works, provision of Services in the Customs Union, a zero tax rate is applied when transporting goods from Russia to Kazakhstan.

Author of the article
Establishment of a branch or representative office of a Russian company on the territory of the Republic of Kazakhstan. How to register a business without problems?
Valentina Khlavich
Managing Partner
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