At the Interregional Forum “Regional Cooperation - the Basis for the Development of Local Content in Purchasing Subsoil Users”, the discussion of the main provisions of the Code “On Subsoil and Subsoil Use” and the new Tax Code.

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Friday, 09 February 2018 16:57

Discussion and explanation of the norms of the new Code “On Subsoil and Subsoil Use” was devoted to the 1st session of the Interregional Forum “Regional Cooperation - the Basis for the Development of Local Content in Purchasing Subsoil Users” in Aktobe. The organizers are the Ministry of Energy of the Republic of Kazakhstan and Akimat of Aktobe oblast. Among the participants are Majilis deputies, representatives of the Ministry of Investment and Development, sectoral Associations and Unions, subsoil users and producers of the Aktobe, Atyrau, Mangistau, West Kazakhstan, North Kazakhstan, Kyzylorda, Zhambyl, South Kazakhstan oblasts, and research institutes of Kazakhstan.

The General Director Aset Magauov and the Executive Director for Legal Affairs Zangar Nogaybai represented the KAZENERGY Association.

Opening the session, Kairat Bekenov, deputy Akim of Aktobe oblast, noted that the western regions are the focus of companies - subsoil users, whose tax deductions largely form both the republican budget and the regional budget. In this regard, the adoption of the new Tax Code and the Code “On Subsoil and Subsoil Use”, which takes into account the costs of companies for geological exploration - can contribute to the further development of the region and attract additional investment. 

 Makhambet Dosmukhambetov, First Vice-Minister of Energy of the Republic of Kazakhstan, addressing the audience, also noted that on December 27, 2017 a new Code “On Subsoil and Subsoil Use” was adopted, which comes into force on July 1 of this year. The development of the Code was conditioned by the cardinal changes that have occurred in recent years in the world energy markets. The basis for the work on the Code in the part of the HRM is the fulfillment of the following tasks: fulfillment of the instructions of the Head of State (in steps 74-1 and 75); introduction of incentive mechanisms for private investment in geological study of subsurface resources and geological prospecting; ensuring predictability and stability of regulation (“rules of the game”); maximum possible simplification and reduction of procedures and terms of interaction of subsoil users with regulatory bodies (elimination of so-called “administrative barriers”).

In general, the Code encourages exploration and production. Dosmukhambetov stressed that the innovations touched upon critical issues for current subsoil users and potential investors, and are intended to stimulate them to further production development and geological research.

The General Director of the KAZENERGY Association Aset Magauov made a report on the provisions of the Code “On Subsoil and Subsoil Use”. In preparation for this important document, the KAZENERGY Association alone received over 300 amendments based on the opinion of the industry companies, and more than 60% of them were reflected in the Code. A similar situation has developed under the new Tax  

In the report, Aset Maratovich dwelled in detail on the novels of the Code “On Subsoil and Subsoil Use”, which are aimed at improving the investment climate in Kazakhstan, both in solving conceptual issues and on current subsoil use issues. From the conceptual (important for investors) issues, for example: preservation of contractual system of subsoil use, with guarantees of stability of contracts from changes in legislation, according to international practice; competitive system for granting subsoil use rights, in the form of an auction, in accordance with international practice; evolutionary transition to international standards for accounting for recoverable reserves since 2024.

In addition to the innovations of the new Code “On Subsoil and Subsoil Use”, Magauov also pointed to the next conceptually important document for the industry - the Environmental Code.

In general, the participants of the Forum presented numerous concrete examples of changes aimed at dramatically improving the investment climate in the subsoil use sector, such as the transition to electronic auctions, the introduction of international accounting standards for recoverable reserves, and many others.

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