Pros and cons: Differing views emerge on the AIFC’s future in Kazakhstan

According to Kazakhstan’s Minister of National Economy Serik Zhumangarin, the Astana International Financial Centre (AIFC) has become a tool that foreign companies use to evade taxes, turning it into something like an offshore zone within the country. The official made this claim during a discussion of the new Tax Code in the Senate, the upper house of the country’s parliament, as the government proposes banning the simultaneous use of two preferential regimes: the AIFC and the Entrepreneurial Code. If a company wants to receive benefits under an investment agreement, it should not be a resident of the AIFC, the ministry says.

However, Speaker of the Senate Maulen Ashimbayev disagreed with this position.

«We have been cherishing the AIFC for so many years, giving it so many opportunities, and now you’re proposing reducing its role as the main platform for attracting investors by demanding that benefits be provided only to companies that are residents of the Republic of Kazakhstan, not the AIFC,» he said.

Zhumangarin argued that the issue has been under discussion for about two years. Meanwhile, these loopholes in the functioning of the AIFC are costing Kazakhstan tax revenue.

«We are losing taxes because the AIFC can become some kind of additional offshore within Kazakhstan. I am not going to name any specific companies, but one of them moved its headquarters to the hub using its holding company, causing us to lose more than $383 million in taxes (CIT and VAT). And this is an alarming trend, so perhaps we need to somehow close this loophole,» Zhumangarin said.

He emphasized that there is no issue if companies operating in Kazakhstan want to register in the AIFC, but this should not lead to tax losses for the state budget. In his view, this is the essence of the proposed changes.

While agreeing with the broader goal of boosting tax revenues, Ashimbayev opposed the idea of simply canceling previous decisions made by the government, describing this approach as not necessarily justified or effective.

Ashimbayev said that dismantling a functioning system without first establishing an effective alternative could be counterproductive, especially considering the current investment trends in the country.

According to the speaker, the authorities should proceed with caution when dealing with both domestic and international investors, as what all investors seek is stability, along with clear and long-term rules of the game — ideally with a horizon of 10 to 15 years.

«If we adopt a new system or abandon the current one, we’ll need to explain our actions to investors. I mean, this is a huge task, and it must be handled carefully. Even after the Tax Code is adopted, this work must continue. We will probably need to review law enforcement practices, assess the general economic environment, and consider global trends. In this regard, it is very important that reforms are not made for the sake of reform, but to meaningfully improve the investment climate in our country,» Ashimbayev emphasized.