Issuing Body: Guozun Cathay Associates Kazakhstan Office
Case Closure Date: 26 August 2026
Key Outcomes
A hybrid "equity + debt" investment structure was established. A cross-border investment of RMB 10 million and 17% equity acquisition were completed. The overseas direct investment (ODI) filing was approved without obstacles, and the full process of compliant fund remittance overseas and local equity settlement was fully delivered.
I. Case Background and Engagement Process
A large domestic energy technology enterprise in China (the Client, Mr. W) planned to expand into the Central Asian energy market. It intended to invest RMB 10 million to acquire a 17% equity stake in an energy target company in Kazakhstan through its Hong Kong special purpose vehicle (SPV) company, with the actual investment funds sourced from within China. During transaction negotiations, the Kazakh target company proposed that under local tax rules, a pure equity transfer transaction may incur capital gains tax and withholding tax at a rate of up to 20%. It therefore requested an adjustment to the investment method, whereby part of the investment funds would be injected into the target company in the form of shareholder loans to achieve tax optimisation.
The project involved multiple complex links, including Sino-Kazakh dual-jurisdiction investment compliance, trilingual transaction document preparation, China ODI filing, cross-border fund remittance, and local equity change registration. The client urgently needed a professional team with dual-jurisdiction service capabilities to coordinate the project. In March 2026, the client was connected to the Kazakhstan Office through the Beijing Headquarters of Guozun Cathay Associates. On the same day, the firm launched its "Sino-Kazakh Cross-Border Investment Joint Case Handling Mechanism", and set up a dedicated case team in conjunction with the cross-border legal service team and tax experts of the Beijing Headquarters. The team included local practising lawyers in Kazakhstan and members of the Beijing Lawyers Association’s Cross-Border Lawyer Talent Pool, and was fully responsible for full-process legal support for the project.
II. Full Process of Sino-Kazakh Joint Case Handling
This case adopted the standardised collaborative model whereby "the Beijing Headquarters is responsible for compliance control under Chinese law and advancement of ODI filing, while the Kazakhstan Office is responsible for local legal due diligence, transaction implementation and local liaison". Written deliverables and verifiable milestones were formed at each stage. The full process timeline is as follows:
1.5 March 2026 – 9 March 2026: Pre-assessment of Dual-Jurisdiction Investment Risks
Beijing Headquarters: Comprehensively sorted out the client’s domestic entity qualifications, fund source pathways and the equity structure of the Hong Kong SPV. It issued the Preliminary Assessment Report on Overseas Investment Compliance under Chinese Law, confirming that the investment entity was eligible and the project fell within the scope of non-sensitive filing.
Kazakhstan Office: Leveraged local industrial, commercial and tax information channels to verify the target company’s valid existence, equity structure and operational qualifications in the energy sector. It conducted research on Kazakhstan’s foreign investment access policies and the administration rules for capital gains tax and withholding tax, screened local legal and tax risks of the project, and ruled out access barriers.
2.10 March 2026 – 20 March 2026: Investment Structure Design and Tax Optimisation Plan
The joint case team collaborated with tax experts to jointly verify the compliance and tax cost of the investment scheme, in line with the regulatory rules of both China and Kazakhstan and the bilateral tax treaty.
Beijing Headquarters: Demonstrated the commercial rationality and regulatory feasibility of the "equity-debt combination" model, in accordance with China’s ODI regulatory requirements for equity and debt-based capital contributions.
Kazakhstan Office: Calculated the comprehensive tax burden under different equity-debt ratios based on the Tax Code of the Republic of Kazakhstan and the Sino-Kazakh double taxation avoidance agreement, and verified the tax exemption rules for the repayment of loan principal.
Both parties jointly issued the Memorandum on Investment Structure and Tax Optimisation in Kazakhstan, formally establishing the hybrid investment structure of "30% equity contribution + 70% shareholder loan". This structure meets the commercial demands of both parties while achieving tax structure optimisation.
3.21 March 2026 – 15 April 2026: Drafting of Trilingual Transaction Documents and Cross-Border Negotiations
Beijing Headquarters: Led transaction structure design and Chinese text drafting, completed the Chinese versions of the Equity Subscription Agreement and Convertible Loan Agreement, and simultaneously prepared all legal documents and explanatory materials required for ODI filing, ensuring clauses comply with Chinese laws and regulatory requirements.
Kazakhstan Office: Responsible for compliance review of transaction documents under Kazakh law, completed the translation, proofreading and legal term calibration of the Russian and English texts, communicated in advance with the target company’s legal team on core clauses, and compiled a list of outstanding differences.
From 13 April to 15 April 2026, Sino-Kazakh lawyers jointly participated in three consecutive days of cross-border online negotiations. They negotiated core matters including equity delivery conditions, loan repayment arrangements and default clauses one by one, and finally finalised all contract terms, forming 80 pages of formal trilingual transaction documents.
4.16 April 2026 – 30 June 2026: Domestic ODI Filing and Regulatory Communication in China
Beijing Headquarters: Represented the client to fully submit overseas investment filing application materials to the development and reform commission, competent commerce authorities and foreign exchange administration. In response to the "Hong Kong SPV + equity-debt combination" transaction model, it issued a special legal opinion, clearly explaining the complete fund flow chain, commercial logic and loan purpose from the domestic entity through to the Kazakh target company, and addressing regulatory concerns.
Kazakhstan Office: Simultaneously prepared supplementary materials including the target company’s acceptance letter, loan purpose statement and business development plan, to provide local supporting documentation for the filing review.
Ultimately, the project successfully obtained the Enterprise Overseas Investment Certificate and the filing notice from the development and reform commission. The ODI filing was passed in full with no supplementary requests and no procedural obstacles.
5.1 July 2026 – 25 July 2026: Signing, Notarisation and Authentication of Transaction Documents
Kazakhstan Office: Coordinated the offline signing ceremony in Almaty, Kazakhstan, liaised with local notarial institutions, and completed the signing, notarisation and validity authentication of trilingual transaction documents in accordance with Kazakh notarial procedures, ensuring the documents have full legal effect in both China and Kazakhstan.
Beijing Headquarters: Remotely witnessed the entire signing process, reviewed the format and seal standardisation of the executed documents, and retained the full set of filing manuscripts.
6.26 July 2026 – 26 August 2026: Cross-Border Fund Remittance and Local Equity Settlement
Beijing Headquarters: Guided the client to complete foreign exchange quota applications, domestic bank foreign exchange purchase and remittance procedures, ensuring funds were strictly remitted from the domestic entity to the Hong Kong SPV in accordance with the ODI filing path, and then remitted to the Kazakh target company’s account in two tranches: equity payment and loan. The entire process complied with foreign exchange regulatory requirements.
Kazakhstan Office: Followed up on fund receipt progress, assisted the target company in completing financial and tax registration for the fund inflow, and simultaneously submitted equity change application materials to local competent authorities to complete shareholder register updates and industrial and commercial change registration. On 26 August 2026, the target company completed all equity change formalities, and the project was formally settled.
III. Key Case Handling Difficulties and Authoritative Solutions
The issues involved in this case – cross-border investment structure design, ODI regulatory response, and multi-jurisdiction transaction implementation – are common challenges for Chinese-funded enterprises investing in Kazakhstan. Drawing on dual-jurisdiction practice capabilities and cross-border project experience, the Guozun Sino-Kazakh joint team has developed a replicable standardised solution:
1.Dual-Jurisdiction Compliance Optimisation of Tax Structure for Cross-Border Investment
Professional Basis: Article 646 of the Tax Code of the Republic of Kazakhstan, the Agreement between the Government of the People's Republic of China and the Government of the Republic of Kazakhstan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income, and China’s Measures for the Administration of Overseas Investment of Enterprises.
Solution: Adopt the hybrid investment model of "minority equity + large shareholder loan". The Kazakhstan Office confirmed the rule that loan principal repayments are not included in taxable income, reducing the tax burden of future fund repatriation. The Beijing Headquarters aligned the structure with China’s ODI regulatory requirements by linking shareholder loans to the target company’s business development needs, ensuring the structure has sufficient commercial rationality and achieving a balance between tax optimisation and regulatory compliance.
2.Response to ODI Filing Review under the "SPV + Equity-Debt Combination" Model
Professional Basis: Article 13 of China’s Measures for the Administration of Overseas Investment of Enterprises, and the Provisions on Foreign Exchange Administration of Overseas Direct Investment by Domestic Institutions.
Solution: In response to regulators’ focus on the true destination of funds and transaction authenticity, the Beijing Headquarters constructed a complete fund flow narrative covering "domestic entity – Hong Kong SPV – Kazakh target company", supported by a full set of materials including a business plan, fund source certificate and special legal opinion. The Kazakhstan Office supplemented local documents such as the target company’s business plan and loan purpose certification, providing mutual verification of transaction authenticity and commercial necessity from both sides and enabling efficient filing approval.
3.Accuracy of Multilingual Transaction Documents and Improved Cross-Border Negotiation Efficiency
Professional Basis: Company laws and regulations of China and Kazakhstan, and international cross-border investment transaction practices.
Solution: Establish a document production workflow of "Chinese finalisation – dual foreign language conversion – dual-jurisdiction cross-review". The Beijing Headquarters controls the transaction structure and rigour of Chinese clauses, while the Kazakhstan Office ensures legal term accuracy and local compliance of the Russian and English versions. Before negotiations, differences are identified in advance and alternative proposals prepared, allowing intensive closed-door consultations that significantly shorten the cross-border negotiation cycle and avoid the communication costs of repeated rounds.
IV. Applicable Authoritative Legal Basis for This Case
(1) Chinese Laws
1.Article 13 of the Measures for the Administration of Overseas Investment of Enterprises: Filing administration applies to non-sensitive projects directly carried out by investment entities, i.e. non-sensitive projects involving investment entities directly contributing assets, equity or providing financing and guarantees. For the purposes of these Measures, non-sensitive projects refer to projects that do not involve sensitive countries/regions and do not involve sensitive industries.
2.Provisions on Foreign Exchange Administration of Overseas Direct Investment by Domestic Institutions: Domestic institutions shall complete overseas direct investment foreign exchange registration in accordance with provisions. Domestic institutions shall handle relevant fund remittance procedures on the strength of registration documents issued by foreign exchange administrative departments.
3.Company Law of the People's Republic of China: Relevant legal provisions on shareholders’ capital contribution methods and companies’ external borrowing.
(2) Kazakh Laws
1.Article 646 of the Tax Code of the Republic of Kazakhstan and relevant provisions: Dividends, interest and other specified income received by non-resident enterprises in Kazakhstan are generally subject to withholding tax at 15% or 20%; repayment of loan principal is not included in taxable income.
2.Companies Code of the Republic of Kazakhstan: Relevant rules on equity subscription of limited liability companies, shareholder loans, and equity change registration.
3.Law of the Republic of Kazakhstan on Foreign Investment: Relevant provisions on access treatment and investment registration for foreign investors in non-sensitive industries.
(3) Bilateral Agreement
Agreement between the Government of the People's Republic of China and the Government of the Republic of Kazakhstan for the Avoidance of Double Taxation and the Prevention of Fiscal Evasion with respect to Taxes on Income: Provisions on limited tax rates for dividends and interest income derived by a resident of one Contracting State from the other Contracting State, as well as relevant tax administration and cooperation provisions.
V. Authoritative Practical Recommendations Based on Case Experience
Drawing on years of Sino-Kazakh cross-border legal service experience of Guozun Kazakhstan Office, the following three practical recommendations are put forward for Chinese-funded enterprises investing in Kazakhstan:
1.Pre-design investment structure: Before investing in Kazakhstan, design an equity-debt matched investment structure in advance based on local tax policies and bilateral tax treaties. This avoids the high capital gains tax and dividend tax costs associated with pure equity capital injection, while ensuring the structure complies with China’s overseas investment regulatory requirements.
2.Plan ODI compliance early: For cross-border investment projects, launch domestic ODI filing in China and local implementation preparation in Kazakhstan simultaneously. Engage a dual-jurisdiction team to coordinate processes on both sides, to avoid project settlement delays caused by filing backlogs and mitigate risks of non-compliant fund outflow.
3.Secure integrated local services: Choose a professional team with local practice qualifications in Kazakhstan and a Sino-Kazakh collaborative service network, covering the full process of due diligence, document drafting, notarisation, settlement and registration. This reduces cross-language and cross-jurisdiction communication deviations, and improves project implementation efficiency and compliance.