EXPERT INTERVIEW: Influence of potential decreasing of CIT rate on Kazakhstan issuers` shares

/IRBIS, Valeriy Khegay, August 6, 2008/ - July30 mass media announced that Kazakhstan government examines draft of Tax Code, in which the rate of corporate income tax (CIT) decreased from 30% to 15-20%. According to simple calculation in case of adoption, potential growth of companies` net income and their monetary flows can make 14-21%. Analysts, interviewed by IAFM IRBIS told their opinions on the theme that new tax measure, in case of adoption, may push up values of Kazakhstan companies` shares. "We expect that decreasing of corporate income tax will positively effect values of Kazakhstan companies` shares, engaged in non-primary sectors. According to our estimation, tax charge (including pension charge) for non- primary sectors companies may reduce by 10% (in case of tax decreasing from 30% to 15%). Tax assessment of primary sector companies will likely to increase" - Yuriy Khramtsov, economist of VISOR Capital considers. Nurlan Rahimbaev, the head of branch analytics of Subsidiary organization of joint stock company BTA Bank BTA Securities JSC has the same opinion in the part of increasing of tax charge in primary sector; he thinks that shares of primary sectors companies won't feel positive effect of CIT rate decreasing as new Tax Code also provide supplementary direct charge for them in the form of tax on minerals production and tax on surplus profit. "Non-primary sector, including "telecoms" (shares of Kazakhtelecom JSC, IRBIS note), banks and other non-primary companies will mostly feel changes in Tax Code. However, negative relation to bank shares will unlikely to change as the current problems of industry such as assets` quality worsening level possible positive effect" - Mr. Rahimbaev suggests and expects positive influence from CIT decreasing on Kazakhtelecom`s JSC shares value and other small companies of non-primary sector. What comes to bank sector, there is contrary opinion: "This tax measure, in case of adoption, will effect firstly banks and production companies and will increase the acute value of its shares" - Vitaliy Kan, analyst of external analysis managing and forecasting of BTA Bank JSC considers. Along with this, Mr. Kan notes that effect of CIT decreasing for primary companies will likely to be leveled by tax on minerals production. Shakhnazar Tleuliev, financial analyst of Asia Broker Services JSC also tells about positive influence of potential decreasing of CIT rate on non-primary companies` sector and negative - on companies` shares of primary sector. Mr. Tleuliev positively estimates transferring of tax charge from non-primary to primary sector as this strategy diversifies Kazakhstan economy in long- term prospect, what makes the local stock market attractive owing to majority of local companies from different sectors of economy. Information is presented within the frames of weekly expert interview on acute questions of Kazakhstan and international stock market development, made by IAFM IRBIS. Analysts of Asia Broker Service JSC, Subsidiary organization of joint stock company BTA Bank BTA Securities JSC, BTA Bank JSC, VISOR Capital JSC partici- pated in interview. IAFM IRBIS expresses its gratitude for participation in this project. For detailed information please contact us Tel.: (727) 237 53 41 [2008-08-06]