In 2020, we can see a significant increase in the volume of venture capital deals in the AIFC, which is primarily due to a number of significant investments in technology startups. One of the requirements of individual investors and institutions was the registration of startups in the AIFC and the use of our jurisdiction for structuring investment deals. As a result, in 2020, 10 financing transactions were made through convertible loan agreements and more than 5 transactions through private placement and stock purchase agreements.
Even though the jurisdiction of the AIFC is one of the most flexible, transparent and understandable for participants, many investors and founders still need support in understanding of the jurisdiction and the tax regimes of both Kazakhstan and the AIFC. Thus, the AIFC Fintech Hub, in partnership with KPMG Tax & Legal in Kazakhstan, and the law firm Kinstellar, has developed a practical guide to venture capital in the AIFC.
This Guide describes the requirements of the AIFC for the registration and authorization of legal entities, in particular the requirements for VC funds and fund management companies. It also reveals possible ways to structure investment deals and exit strategies for investors. In addition, the Guide provides detailed information on taxes in Kazakhstan and the AIFC. The reader will be able to learn more about the AIFC tax benefits available to investment funds and their management companies, the use of which may allow them to reduce tax liabilities to zero. In conclusion, we present a comparative analysis of Delaware, Cyprus and the AIFC tax regimes, which will be useful for investors and startups considering an alternative jurisdiction for investing and attracting local and foreign financing.
The practical guide is available on the following link: https://fintech.aifc.kz/reports/
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