Doing Business Between Ukraine and Kazakhstan — Legal Considerations for Cross-Border Investors

Economic relations between Ukraine and Kazakhstan rest on intergovernmental agreements covering trade, investment protection and double taxation. Investors working across both countries need to understand the law on each side, and how the two systems interact, to structure transactions that are enforceable and tax-efficient.

This note covers the main legal points for investment between Ukraine and Kazakhstan.

Corporate Structuring

The primary corporate vehicle for foreign investment in Ukraine is the Limited Liability Company, governed by the Law of Ukraine on Limited and Additional Liability Companies (No. 2275-VIII, 2018). Registration is recorded in the Unified State Register of Legal Entities, Individual Entrepreneurs and Public Organisations. Registration documents are reviewed within 24 hours of filing, excluding weekends and public holidays (Law No. 755-IV, Article 26), and a defective filing can be refused. Law No. 2275-VIII sets no minimum charter capital for an LLC (Article 12), although sector laws, for example on banking and insurance, set their own.

In Kazakhstan, the equivalent vehicle is the Limited Liability Partnership, governed by the Law on Limited and Additional Liability Partnerships. For investors seeking to hold Kazakhstani assets through an international structure with English common law governance, an AIFC holding company provides a recognised alternative — combining an income tax exemption until 2066 on dividends from, and gains on, shares of AIFC-registered companies with a familiar governance framework for European and international investors. The exemption covers income on the shares of the AIFC company itself; it does not of itself cover dividends the AIFC company receives from a Kazakhstani subsidiary.

Where an investor needs entities on both sides, a Ukrainian subsidiary and a Kazakhstani operating entity should be planned together.

Bilateral Investment Protection

Ukraine and Kazakhstan are both Contracting Parties to the Energy Charter Treaty, which protects investments in the energy sector, and maintain a bilateral investment treaty (BIT), signed on 17 September 1994, providing mutual protection for investors from each country. The BIT covers fair and equitable treatment (Article 3), protection against expropriation without compensation (Article 6), and, after six months of negotiation, a choice between the host state’s courts, ICSID arbitration and ad hoc UNCITRAL arbitration for investor-state disputes (Article 9).

For Ukrainian investors entering Kazakhstan and Kazakhstani investors entering Ukraine, the BIT should be considered at the structuring stage, particularly in choosing the investment vehicle and the jurisdiction of the holding entity.

Tax Considerations

Ukraine and Kazakhstan have concluded a Convention for the Avoidance of Double Taxation (Kyiv, 9 July 1996). Under the Convention, withholding tax on dividends paid from a Kazakhstani entity to a Ukrainian holding company is capped at 5% where the beneficial owner is a company holding at least 25% of the capital, and at 15% in other cases. Interest and royalties are each capped at 10%.

For entities in the AIFC, the corporate income tax exemption until 1 January 2066 on listed financial services and certain related professional services is a further consideration for Ukrainian investors with significant Kazakhstani assets. It depends on the activity and does not extend to every AIFC company.

Dispute Resolution

Disputes between Ukrainian and Kazakhstani parties are usually best resolved by international arbitration, under ICC, LCIA or Vienna International Arbitral Centre (VIAC) rules, or at the AIFC International Arbitration Centre, which hears disputes under an arbitration agreement, including those involving AIFC-incorporated entities.

Both Ukraine and Kazakhstan are parties to the New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards, meaning an award rendered in one jurisdiction can be recognised and enforced against assets in the other, subject to the refusal grounds in Article V of the Convention.

Recent practice shows why the enforcement forum matters. In National Joint Stock Company “Naftogaz of Ukraine” v Gazprom PJSC (Case No. AIFC-C/CFI/2026/0002), the AIFC Court recognised an ICC award of more than USD 1.1 billion on a without-notice application on 15 May 2026. After hearing both sides, it set that order aside on 7 July 2026, holding that it had no jurisdiction to enforce an award made by a tribunal seated outside Kazakhstan. It followed Posco Co. Ltd. v National Centre for Complex Processing of Mineral Raw Materials (Case No. AIFC-C/CFI/2025/0066, 27 May 2026), which also confirms that Kazakhstan’s ordinary courts have jurisdiction over foreign awards. Permission to appeal was granted in both cases because first-instance judges disagreed, and the Court of Appeal heard the appeals on 30 September 2026. No judgment had been published on the Court’s website by 6 November 2026. Until then, an award made outside Kazakhstan belongs in the ordinary Kazakhstani courts.

Court judgments are a different matter, because the New York Convention does not cover them. Ukraine has withdrawn from the 1993 Minsk Convention on legal assistance (Law No. 2783-IX of 1 December 2022) and from the 1992 Kyiv Agreement on commercial disputes (Law No. 2855-IX of 12 January 2023). Ukraine treats them as ended on 29 December 2023 and 5 February 2023; the depositary's register gives 19 May 2024 and 11 October 2024. Ukraine signed but never ratified the 2002 Chisinau Convention, and there is no bilateral treaty between Ukraine and Kazakhstan on legal assistance in civil matters. Recognition therefore rests on reciprocity. Article 501 of Kazakhstan’s Civil Procedure Code accepts reciprocity as a basis, and Article 462 of Ukraine’s Civil Procedure Code presumes it unless the contrary is shown, as the Ukrainian Supreme Court confirmed for a judgment of the High Court in London in Case No. 567/955/15 (23 February 2022). This is a further reason to agree arbitration at the contract stage.

M&A and Corporate Transactions

Cross-border M&A transactions involving Ukrainian and Kazakhstani entities require parallel legal due diligence in both jurisdictions — covering corporate title, regulatory licences, employment matters, and any sector-specific restrictions on foreign ownership. The two reviews should be coordinated, so that nothing falls between separate advisers on each side.

Particular attention is required for transactions involving regulated sectors — banking, insurance, media, and subsoil use — where ownership changes may need approvals or be subject to limits in either country. Each country's requirements should be checked before signing and built into the timetable.

Bond Stone’s Cross-Border Capability

Cross-border mandates are run as one matter, with Vitalii Yanchuk leading on Ukrainian law and the Almaty and Astana teams covering Kazakhstani and AIFC matters.

The firm is ranked by Legal 500 EMEA and recommended by IFLR1000 in Kazakhstan, with offices in Almaty, Astana, Bishkek, Chicago, Kyiv, and Tashkent.