Beginning on January 1, 2009, a new tax code has come into effect in Kazakhstan which will result in broadly stable tax rates for mining companies in the current environment of low commodity prices.
Under the new tax code, corporate income tax will fall in stages from the current 30 percent to 20 percent by 2009, and to 15 percent by 2011. At the same time, the new code includes new minerals extraction taxes for each type of mineral. Payments will be determined from the value of extracted mineral resources by reference to the sale price. In addition, the revised excess profit taxes imposed on net profits is designed to encourage mining companies to produce value added products within Kazakhstan.
Commenting on the new tax law, CFO of Kazakhstan-based mining group Eurasian Natural Resources Corporation Plc. (ENRC) Miguel Perry stated, "We are pleased with the introduction of the new tax code in Kazakhstan, which provides us with greater clarity and predictability."
ENCR will benefit from a one-off impact in 2008 due to a release in deferred tax liabilities, reducing the effective corporate income tax by about $100 million.
Kazakhstan's new tax code was signed by the country's president Nursultan Nazarbayev on December 10, 2008.