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March 17, 2017 www.intellinews.com I Page 17
uneven wealth distribution in the country of 18mn, where the richest 50 people are worth a combined $24bn, according to Forbes Kazakhstan.
The number of applicants under the scheme turned out to be even narrower than forecast by Spanov, as only around 0.8% or 140,000 people took advantage of the capital amnesty programme by the end of 2016.
Most of the 140,000 people are thought to have applied for property legalisation, amounting to KZT1.6tn or 151,000 real estate units and 213 stakes in legal entities. Most of this undocument- ed real estate was a byproduct of the “samostroy” phenomenon, or construction of buildings without approval from the authorities. Kazakhs often find it easier to build or expand real estate, typically housing, without construction permits, since pay- ing a fine is significantly simpler in Kazakhstan than the process of permit acquisition. As such, the amnesty programme provided an opportunity for Kazakh citizens to bypass the legal fines.
Offshore economy
It is the remaining shadow capital worth KZT4.1tn that is ”a more complex question”, Spanov says, “but this would be a question for the tax au- thorities”. A better way to combat Kazakhstan’s shadow economy would be via “[reforming] the tax code and the judicial system”, Spanov believes. He also argues that, when it comes to circulation of capital, the authorities’ concern should be direct- ed at the country’s “offshore economy”.
“The offshore economy remains ignored – in fact, it is the legal capital outflow channel of Kazakhstan’s economy,” Spanov notes. “Most of the world under- stands the disadvantages [an offshore economy] can carry to the national economy and, thus, imple- ments de-offshorisation measures – but, not us.”
“The main reasons [behind] the outflow of capi- tal [from the country] have been and still remain the weak definition and enforcement of property rights, high risk of expropriation and other mani- festations of the weak institutional environment,”
Halyk Finance analyst Nurfatima Dzhandarova told Tengrinews.kz back in 2014, as she warned that the amnesty law “will not fix the issues of capital outflow”.
However, the government claims to have already embarked on measures to “withdraw out of the shadows” capital located in 19 offshore territo- ries under the Strasbourg anti-money laundering convention. Astana ratified the convention in 2016, close to a decade after it first applied.
“We cannot speak now about [the amounts] with- drawn out of the shadows, from these countries. Because even in the case of legalisation of these funds... from offshore jurisdictions, we do not keep track of such statistics. Because [the information] still remains under [state] secrecy," deputy head of risk management, analysis and statistics of the State Revenue Committee Yerlan Sagnayev said last September.
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