Public support of RFCA projects

Public support of the RFCA project is based on tax exemptions and other benefits for the entities of the organized securities market such as investors, issuers and broker and dealer companies. So, there are tax reliefs and other benefits for investors and professional participants as well as compensation of audit expenses incurred by the issuers of financial instruments admitted to the RFCA STF.

Today, the following tax exemptions are provided in the RFCA:

Tax Exemptions for the RFCA Participants Rendering Financial Services:

Pursuant to the Tax Code of the Republic of Kazakhstan, the income received by the legal entity-RFCA participant in the result of provision of financial services at the RFCA STF should be excluded from the aggregate annual income of taxpayers.

It gives the opportunity to attract more highly qualified brokers and dealers. In its turn, it will improve the competitiveness of existing market participants and quality of the services rendered, attract new investors and create favorable conditions for new products arrival.

Income of legal entities and natural persons (residents and non-residents) are exempted from taxes on:

- dividends, interests on debt securities purchased at the RFCA STF;

- price appreciation when selling debt securities listed at the RFCA STF in case of making civil law transactions with them at this trading floor.

In order to enhance the growth and promote to further development of the stock market in Kazakhstan, the Agency is working on inclusion of the following tax benefits in the draft of the new Tax Code:

1) reduction of the corporate income rate for issuers of the RFCA STF;

2) tax exemption of the income earned from transactions with precious metals;

3) exclusion of taxes on the income from transactions with derivative financial instruments (DFI);

4) exclusion of taxes on income from transactions with Islamic financial instruments;

5) tax exemption for the returns on units of mutual funds (not hedge funds).

Compensation of Audit Expenses to Issuers of Financial Instruments Admitted to the RFCA STF

According to the Rules of Compensation of Audit Expenses of Issuers of Financial Instruments Admitted to the RFCA STF approved by Republic of Kazakhstan Government Decree No.523 as of May 30, 2008, the audit expenses are reimbursed to the issuers that have not audited financial reporting in compliance with the financial reporting standards and that placed their financial instruments at the RFCA STF.

Applications are accepted by May 1 of every year. Audit expenses are compensated from February 1 of the year following the year of submission of the application for audit expenses compensation.

The amount of compensation of audit expenses to one issuer may not exceed the amount equal to 12,000 monthly calculation indices. This amount is paid one time only.

Reduction of the Registration Period for New Broker Companies

The procedure of the state registration is stipulated by the corresponding Rules worked out by the Agency. These Rules regulate the Agency activities and communications according to the principle ‘one window’. This principle simplifies the procedure of provision of potential RFCA participants with the status of the legal entity and allows for receipt of the certificate of state registration of the legal entity in the specified form, taxpayer’s certificate and statistical card upon expiry of three business days from the time of submission of the application with all necessary documents. The short period of registration has a good impact on efficiency of RFCA operations by simplifying the registration procedure for RFCA participants.

Stock Market Staff Training. The RFCA Academy

Within the frames of implementation of the RFCA Development until 2010 Program, the decision on establishment of the education center “The Academy of the Regional Financial Center of Almaty” (RFCA Academy) was made. This project is aimed at improvement of the financial literacy of the population of the Republic of Kazakhstan as well as at establishment of the education center for training/retraining of professionals for the financial sector, in particular, for the stock market being developed and financial companies, by conducting short-term classes and trainings in order to enhance qualifications of financial market professionals. The RFCA Academy trains qualified specialists who are required for operations in the securities market and who will be able to become active participants in this sector due to the knowledge and skills obtained.