Bloomberg News

Kazakhs Plan Tax Breaks for Some Mines Amid Commodities Slump

January 29, 2009

Kazakhstan’s government proposed tax breaks for some mining companies to free up 25 billion tenge ($206 million) as it attempts to tackle unemployment amid a slump in global demand for metals and energy.

Should companies that run mines with low profitability decide against firing workers and invest in “particularly important projects,” they will be offered reductions on the mineral extraction tax, Finance Minister Bolat Zhamishev told Prime Minister Karim Masimov at a meeting in Astana today, according to an e-mailed copy of his speech.

The Central Asian country’s economy may expand in 2009 at the slowest pace in 11 years as a deepening global recession hurts demand for commodities, the nation’s main exports. The jobless rate may rise to as high as 8 percent from “about 7 percent” in 2008, according to a Jan. 20 government statement.

Kazakhstan imposed the mineral extraction tax on energy and metal producers on Jan. 1. Companies that get the tax breaks will bear the same production tax burden as last year, Zhamishev said, without elaborating.

Kazakhstan’s economy may grow about 2 percent after expanding a preliminary 3.1 percent in 2008. That would be the weakest pace of growth since the former Soviet republic’s economy contracted 1.9 percent in 1998.

To contact the reporter on this story: Nariman Gizitdinov in Almaty, Kazakhstan, via the Moscow newsroom at ngizitdinov@bloomberg.net

To contact the editor responsible for this story: Guy Collins at guycollins@bloomberg.net


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