Customs Union and Common Economic Space of the Eurasian Economic Union – impact on Kazakhstan’s tax and customs legislation

Kanat SkakovPartner, Salans

Almaty

05 October 2012

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Brief Overview of History of Formation and Current Status of the Customs Union of the Republic of Kazakhstan, the Russian Federation and the Republic of Belarus

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FORMATION OF THE CUSTOMS UNION OFTHE REPUBLIC OF KAZAKHSTAN, THE RUSSIAN FEDERATION

AND THE REPUBLIC OF BELARUS

In 1994 in Moscow President Nazarbayev proposed to establish the Eurasian Union

The first step for economic integration was made in 1994 in the form of the first Free Trade Zone Agreement

On January 20, 1995 the Presidents of Kazakhstan, Russia and Belarus signed the first Treaty on the Customs Union Formation

In 1999 Kazakhstan, Belarus, Russia, Kyrgyzstan and Tajikistan signed the Agreement declaring the intention to establish the Customs Union and Common Economic Space

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Next step was the establishment of the Eurasian Economic Community (the “EurAsEC”) by Presidents of Belarus, Kazakhstan, Kyrgyzstan, Russia, and Tajikistan on 10 October 2000

On 6 October 2007 Kazakhstan, Belarus and Russia signed treaties on formation of the Customs Union

On 1 July 2010 the Customs Union became effective on the territory of the Republic of Kazakhstan, and the Customs Codes of the Customs Union and of the Republic of Kazakhstan entered into legal force

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MAIN BODIES OF THE CUSTOMS UNION

THE SUPREME BODY OF THE CUSTOMS UNION:

1) Interstate Council at the level of the heads of the state;

2) Interstate Council at the level of heads of government.

EURASIAN ECONOMIC COMMISSION ( REPLACED THE CUSTOMS UNION COMMISSION

FROM 1 JULY 2012):1)EEC Council at the level of deputy

heads of governments2)EEC Board

THE COURT OF THE EURASIAN ECONOMIC

COMMUNITY

CONSULTATIVE COMMITTEES AND EXPERT GROUPS

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THE EURASIAN ECONOMIC COMMISSION

Established by the Treaty dated 18 November 2011 and started functioning from 1 July 2012

The Commission’s main objective is to ensure the proper functioning and development of the

Customs Union and Common Economic Space at the supranational level.

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The Council is in charge of general regulatory activities of the integration processes in the Customs Union and Single Economic Space. It consists of three deputy prime-ministers. The

Council’s decisions are reached be simple majority vote.

The Board is a supranational executive body of the Eurasian Economic Commission which

makes proposals for further integration within the framework of the Customs Union and the Common Economic Space. It has three

representatives from each member state.

Administration of the Eurasian Economic Commission:

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Danial AKHMETOV

Member of the Board (Minister) on

Energy and Infrastructure

Timur SULEIMENOV Member of the Board

(Minister) on Economy and Financial Policies

Nurlan ALDABERGENOV

Member of the Board (Minister) on Competition and Antitrust Regulations

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Constituted by the Agreement on Foundation of Eurasian Economic Community dated 10 October 2000 and by the Decision of the

EurAsEC Interstate Council dated 5 July 2010 No. 502.

Functions:

provides guarantees of uniform enforcement by the Parties; considers the disputes of economic nature arising between Parties on issues

of implementation of decisions of the EurAsEC bodies; considers claims upon compliance with acts of the Customs Union’s bodies to

the international agreements forming the legal base of the Customs Union; resolves disputes between Customs Union Commission and other states of

the Customs Union.

THE COURT OF THE EURASIAN ECONOMIC COMMUNITY

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Function: review a specific issue at the request of the Eurasian Economic Commission.

Expert groups draft reports on the following areas:

customs and tariff regulation; non-tariff regulation; technical regulation; implementation of sanitary, veterinary and phytosanitary measures; customs administration and statistics; indirect taxes, information technologies in the customs union; special protective, anti-dumping and compensation measures, and so on.

CONSULTATIVE COMMITTEES AND EXPERT GROUPS

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Latest Developments

Common Economic Space is in force from 1 January 2012 and functions based on four principles:

Freedom of trade with goods Freedom of trade with services Freedom of movement for financial capital Freedom of movement for human capital

The Customs Union will transform into the Eurasian Economic Union in 2015

a higher form of integration ensuring common tariffs, technical regulation, harmonised trade and immigration legislation, common banking and currency regulation, etc.

Development of Customs Legislation

Full harmonisation of customs legislation within the Customs Union

Customs Code of the Customs Union

Customs Codes of the Member States

Harmonised customs tariffs and procedures

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Implications for Tax Legislation of Member States

Limited harmonisation of tax laws and policies of the Member States

Main focus is indirect taxation (VAT and excise duties) in trade operations between the Member States

Agreement on Principles of Indirect Taxation dated 25 January 2008 Additional Protocols

Stability issues under the Customs Union legislation

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Contact

Partner, Salans Almaty

Tel.: + 7 727 258 2380

Fax: + 7 727 258 2381

Email : kskakov@salans.com

135, Abylai Khan Ave.

050000 Almaty

Republic of Kazakhstan

www.salans.com

Kanat Skakov

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