Subsoil users pay $231,735 in fines for not supporting social projects in Kazakhstan

According to the Prosecutor’s Office of the Abay region, local subsoil users have paid $231,735 in fines for not investing in the development of the regional infrastructure despite obligations to do so under their contracts with the government.

As the law enforcement agency noted, every year subsoil users must allocate funds for the socio-economic development of the region and its infrastructure.

During this inspection, the prosecutors identified 26 companies that avoided meeting their obligations.

«As a result of this inspection subsoil users were forced to pay the government $231,735 in fines,» the agency said in a statement.

In December 2023, the Prosecutor’s Office of the city of Shymkent reported about 17 mining businesses that failed to fulfill their social obligations. The government renounced contracts with seven companies.

Who opposes the practice of nontax payments?

Last year, Executive Director of the Republican Association of Mining and Metallurgical Enterprises (RAMME) Nikolay Radostovets, who represents the interests of the mining business in Kazakhstan, suggested eliminating the practice of nontax payments to the government. As Radostovets highlighted, many companies are currently forced to build schools, plant trees and sign memorandums with local executive bodies, not to mention donate to various charity funds. As a result, such companies bear a significant financial nontax burden.

“If you take a look at a tax burden ratio in the mining industry, you’ll see that it is de-jure quite low. I think that we have to switch to the international system of tax burden ratio evaluation when all kinds of payments are taken into account. We have raised this issue many times. The government has been changing taxes recently, while all we need is just to cut any kind of nontax payments,” he said during the MINEX Qazaqstan conference last year.

Tax reform is the key point in Kazakhstan, the head of the RAMME believes.