Business and Labor activities in the Customs Union 

In Kazakhstan society joining the Customs Union remains a controversial issue. Let’s try to look at the law standards and controls related to the Customs Union that should be used or must be observed when doing business in Kazakhstan.

Concerning the international legal framework 

I would like to draw the attention to the international legal framework, which has been formed in connection with the integration processes.

According to the Treaty on the establishment of the single customs territory and the establishment of the Customs Union (Dushanbe, October 6, 2007, ratified by the RK Law No 44-IV dated June 24, 2008), with the establishment of a single customs territory, the member states of the Customs Union (RK[1], RF[2], RB[3]) shall not apply customs duties, quantitative restrictions and equivalent measures in the mutual trade operations.

In accordance with the Decision of the Interstate Council of the Eurasian Economic Community No 17 dated 27 November 2009 (Minsk), “On the Treaty on the Customs Code of the Customs Union” the Customs Code of the Customs Union was adopted, the provisions of which shall prevail over any other provisions of the customs legislation of the Customs Union. There is also a protocol on introducing amendments and additions to the Agreement on the Customs Code of the Customs Union on November 27, 2009 (Moscow, 16 April 2010).

The Decision of the Commission of the Customs Union dated November 27, 2009 № 130 “Concerning the unified customs tariff regulation of the Customs Union of Belarus, Kazakhstan and the Russian Federation” (Minsk) established that RoK, RF and RB use a single commodity nomenclature of foreign economic activity of the Customs Union (CN FEA CU) and rates of import duties of the Single Customs tariff of the Customs Union.

Also, the Agreement concerning the unified customs register of intellectual property items of the Member States of the Customs Union was concluded (St. Petersburg, May 21, 2010 , ratified by the RK Law # 322 -IV as of June 30, 2010).

Concerning integration in the sphere of certification and technical regulations 

Considerable attention in the integration processes is given to the harmonization of technical regulation.

In accordance with the Agreement on unified principles and rules of technical regulation of the RoK, RF and RB dated November 18, 2010, coordinated policy is being pursued in the Customs Union in the field of technical regulations. In particular, the technical regulations of the Customs Union have a direct effect on the customs territory of the Customs Union.

According to the Decision of the Commission of the Customs Union # 526 dated January 28, 2011 “On the Unified list of products for which mandatory requirements are established within the framework of the Customs Union” (Moscow), a Unified list of products for which mandatory requirements are established in the framework of the Customs Union has been approved.

Further, in accordance with the Agreement on the circulation of products subject to mandatory conformity assessment ( attestation) , in the customs territory of the Customs Union dated 11^th December 2009, the products in respect of which the countries of the Customs Union set the same mandatory requirements, the same shapes and patterns of conformity and also apply the same or comparable research (test) methods and measurements of products during the conformity assessment shall be allowed for circulation in the single customs territory, if they have passed the established conformity assessment procedures in any of the Parties’ territory.

Concerning charging indirect taxes on export and import of goods, work and services 

The member states of the Customs Union signed the Agreement concerning the principles of charging indirect taxes on exports and imports of goods , performance of work , rendering of services in the Customs Union ( Moscow, January 25, 2008 ratified by the Law of RK of April 3, 2009 No 148 -IV), according to which the export of goods is subject to zero rate of VAT, and (or) the exemption from payment (refund of paid amounts) of excise duties provided that documentary evidence of export was presented.

At the same time, the rates of indirect taxes on imported goods in mutual trade should not exceed the rates of indirect taxes imposed on similar goods of domestic production.

The procedure for collection of indirect taxes and the mechanism of control over their payment for exports and imports of goods is governed by the Protocol concerning the procedure for collection of indirect taxes and the control mechanism of their payment for exports and imports of goods in the Customs Union (St. Petersburg, December 11, 2009, ratified by the Law of the RK dated June 30, 2010 # 306-IV).

There is also a protocol on the procedure for collection of indirect taxes in the performance of work, rendering of services in the Customs Union (St. Petersburg, December 11, 2009, ratified by the Law of RK dated June 30, 2010 № 309-IV).

I would like to note that issues related to levying value added tax (VAT) on exports and imports of goods, performance of work, rendering of services in the Customs Union are dealt with in the special Chapter 37-1 of the Tax Code of the Republic of Kazakhstan[4] (Articles 276-1 – 276-23 ) . Accordingly, the calculation and payment of VAT in the Customs Union under the laws of the Republic of Kazakhstan has numerous features. The Government attaches particular importance to regulating in this sphere, and there are severe penalties for violation of law relating to the Customs Union. For example, there is a special Article 218-1 of the Code of Administrative Violations of the Republic of Kazakhstan in respect of non-performance of duties established by the tax legislation of the Republic of Kazakhstan, the taxpayers in export and import of goods , performance of work , rendering of services in the Customs Union, as well as failure to comply with the requirements established by the laws of RK.

Concerning labor migration 

In accordance with Article 5 of the Agreement on the Legal Status of Migrant Workers and Members of Their Families (St. Petersburg, November 19, 2010 – ratified by the Law of RK dated June 27, 2011 # 442 -IV “On Ratification of the Agreement on the Legal Status of Migrant Workers and Members of their families”), a migrant worker and his family members are exempt from registration ( registration at the place of residence ) to the authorized bodies of the state of employment within 30 days from the date of entry into the territory of the state of employment . The period of temporary stay of the migrant worker and his family members shall be determined by the employment contract signed between a migrant worker and the employer.

According to Article 3 of the Agreement, within the framework of the Agreement, activities related to employment of migrant workers shall be performed by employers in the state of employment without any restrictions for the protection of the national labor market and migrant workers are not required to obtain permits for carrying out work in the territories of the Parties.

At the same time, the country has not reduced the measures to support domestic producers, as well as local content in the procurement of goods and services purchased by government organizations and government agencies, companies–subsurface users which are developing simultaneously with integration processes.