State In-kind Grants in Kazakhstan

What are state in-kind grants?

State in-kind grants are a form of government investment incentive under Articles 283-1 and 283-3 of the Entrepreneurial Code of the Republic of Kazakhstan No. 375-V dated 29 October 2015. The state provides qualifying investors with: land plots; buildings and structures; machinery and equipment — free of charge as a grant for the purpose of implementing an investment project in Kazakhstan. The granted assets become the property of the investor upon fulfilment of the contractual investment obligations specified in the investment contract.

Eligible investors

State in-kind grants are available under a simplified investment contract or an investment agreement under the Entrepreneurial Code, for priority activities approved by the Government. The investor must be a Kazakhstani legal entity — a foreign investor must therefore establish a Kazakhstani subsidiary to receive a state in-kind grant. Bond Stone advises on establishing the Kazakhstani investment vehicle to access state in-kind grant eligibility.

Grant cap — 30% of investment in long-term assets

Under a simplified investment contract, the value of a state in-kind grant is limited to 30% of the investment in the long-term assets of the Kazakhstani legal entity. The grant is valued at the market value of the assets. If the value of the assets sought exceeds the cap, the entity may still receive them by paying the difference (Article 283-3(5)). Bond Stone advises on structuring investment contracts to optimise the use of the in-kind grant within the 30% cap.

Conditions for ownership transfer

The granted assets are transferred to the investor provisionally at the commencement of the investment project — but legal title transfers to the investor only upon completion of the contractual investment obligations. If the investor fails to fulfil its obligations, the state may reclaim the granted assets. Bond Stone advises on the contractual conditions for ownership transfer and on the risk of asset reclamation in the event of investment contract non-compliance.

Types of grantable assets

State in-kind grants may comprise: land plots — transferred under land use rights initially, with ownership transfer upon obligation fulfilment; buildings and structures — state-owned industrial and commercial property transferred for investment project use; machinery and equipment — state-owned production equipment transferred to the investor. The availability of specific assets depends on the relevant local executive authority and the assets in its inventory available for grant. Bond Stone advises on identifying available grant assets and coordinating with the relevant local executive authority.

Application procedure

Applications for state in-kind grants are submitted to the authorised investment body together with the investment contract application. The investor must: identify the specific assets sought; confirm their availability with the relevant state authority; and demonstrate that the grant value does not exceed 30% of the investment in long-term assets, or pay the difference. Bond Stone prepares and submits in-kind grant applications as part of the investment contract process.