Annex A. Historical overview of the evolution of payments for emission

Evolution of the collection of payments for emissions in Kazakhstan

In Kazakhstan, like other countries of Eastern Europe, the Caucasus and Central Asia (EECCA), economic instruments of environmental policy were introduced in the early 1990s, when all these countries were still part of the Soviet Union.

The system of economic instruments in Western Europe differs significantly from that in EECCA countries. The former mainly includes taxes on products, for example, on energy carriers, as well as targeted taxes on emissions/discharges of certain pollutants. Conversely, the latter has a unique system of payments for air pollution, water sources and the generation of solid waste.

In Kazakhstan, economic mechanisms for regulating environmental protection and environmental management started with Nature Protection Committees, as they were organised in the Republics of the Soviet Union in 1988. Previously, some elements of environmental management took place. These took the form of payments for use of natural resources received by the state budget. Funds were allocated for the protection and production of natural resources to the relevant competent agencies.

The payment for environmental pollution was not yet introduced and was a subject of scientific discussions. Considering the high share of the state in the economy, there were neither economic incentives, nor a generally accepted method for their establishment.

As early as 1989, some regions introduced a charge for environmental pollution decided upon by local executive authorities. The Typical Methodology of the USSR State Committee for Nature (N.N. Lukyanchikov with co-authors) was used as a basis to determine payments. It contained the basic methodological techniques that have since become the foundation of the Kazakhstani payment system:

  • payments for environmental pollution (air, surface and groundwater)

  • cost method of determining the standards of fees

  • the method of reducing the mass of pollutants to the conditional mass using the reduction factor presented below.

The standards of fees and charges for emissions (discharges) of pollutants into the environment for a specific region (P) within the established limits in the planned (calculated) period were determined in accordance with the methodology recommendations approved by the State Committee of the Kazakh SSR. The definition of emission charges (discharges, disposal) of pollutants into the environment was set according to the formula:


Р = ∑ Зt=1 МЛ t where,


  • Зt is the cost in t year (t = 1,2,…., Т; Т being the plan period value), necessary to prevent and compensate for damage caused by emissions (discharges) of pollutants into the natural environment, determined by the republican and regional environmental programmes, plans to eliminate (prevent) the effects of environmental pollution, as well as taking into account contributions to finance inter-regional, inter-republican and all-union environmental programmes (excluding costs for activities carried out by enterprises at their own expenses), in rubble.

  • Млt is the reduced limit of emissions (discharges) of pollutants into the environment for the region as a whole in the tth year, calculated on the basis of the tasks of the regional environmental protection programme, services tonne/year, determined by the formula:


    МЛ t = ∑ Mл jt, where


    MЛ jt is the reduced limit of emissions (discharges) of pollutants into the environment, j is an enterprise in the tth year, the condition t/year, determined from the condition:


    МЛ t = ∑ Кi mл jt , where


    i is the type of polluting substance (i = 1, 2…J)

    Кi is the reduction factor, taking into account the relative danger of ith –the polluting substance calculated by the formula:

    Кi = 1/MPCPSi , where

  • MPCPSi is the maximum permissible concentration of polluting substances (for fishery purposes – for water; sanitary daily average rate for air [see List and codes of air pollutants, St. Petersburg, 1995 expressed in mg/m3]).

  • mл jt is the limit of emissions (discharges) of the ith pollutant in the natural dimension by j – the enterprise in the tth year. The values of these limits are set for each project of the enterprise, in accordance with the stages of achieving the standards for maximum permissible emissions (MPE) or maximum permissible discharges (МPD), and are co-ordinated with the environmental competent authorities.

In this case, the calculation took into account all pollutants according to the draft MPE (MPD). As can be seen from the formula, this methodology only determined general standards for payments. It makes no differentiation by pollutant, but considers the hazard class of emissions.

The nature of payments for environmental pollution became more systemic after the creation of the State Regulatory Committee and the methodological framework, which was initially tested in a number of regions and then resulted in several activities:

  • creation of regional (1989-91) and of republican (1998) environmental protection funds

  • rationalisation of maximum permissible emissions and discharges into the environment, based on instructions for the development of MPE and MPD

  • approval in 1994 by the Ministry of Ecology and Bioresources of the “Methodology for determining payments for environmental pollution”

  • approval in 1995 of the “Temporary procedure for compensation of damage caused to the environment by violation of environmental legislation”

  • approval in 1996 of the methodology for determining payments for pollution of the environment by mobile sources

  • establishment of government payments for the use of natural resources

  • consolidation of the nature conservation funds into the republican and regional budgets and transfer of functions for the collection of payments to the tax inspectorate.

In 2001, the government abolished the Republican Fund for Environmental Protection, and in 2002 the regional funds were transformed into units of akims (mayors) apparatuses.

International experts of the UN Economic Commission for Europe and the OECD conducted the first environmental performance review of Kazakhstan in 2000. In accordance with recommendations from the report, the amount of pollutants on which payments are imposed has been significantly reduced since 2008.

The Tax Code of the Republic of Kazakhstan establishes the rates of pollution fees resulting from emissions into the environment.

Categorisation of environmental charges and payers

Payments for emissions into the environment in accordance with the Environmental Code of Kazakhstan are one of the main mechanisms for the economic regulation of environmental protection and environmental management.

Payers of payments for emissions are individuals and legal entities permanently or temporarily residing in Kazakhstan, operating in the territory of Kazakhstan and undertaking “a special use of nature”.

The Tax Code and the provisions of the Environmental Code (as amended) regulate the categories of taxpayers, the standards for emissions of harmful substances and the calculation of payments for emissions into the environment.

The “special use of nature” is carried out on the basis of an environmental permit. This is issued by a competent authority in the field of environmental protection or by the local executive bodies of regions, cities of republican significance (e.g. Almaty) and Nur-Sultan, except for emissions of pollutants from mobile sources.

Structural divisions of a legal entity are recognised as independent payers based on their location. The recognition of a payer’s structural divisions for the emission comes into force on 1 January of the year that follows the registration of the structural divisions and adoption of the relevant decisions.

Newly created structural divisions are recognised from the day of their creation or from 1 January of the following year of creation of the division.

Taxpayers who apply for a special tax regime for peasant or private farms are exempt from paying for environmental emissions, which are caused by the activities covered under the special tax regime for peasant or private farms.

The object of taxation is the actual volume of emissions into the environment. This includes emissions established by the competent authority in the field of environmental protection and during the inspections by regional bodies to ensure compliance with the environmental legislation of Kazakhstan. The emissions covered are those in the form of:

  • emissions of pollutants

  • discharges of pollutants

  • disposed production and consumption wastes

  • placed sulphur, generated during oil operations.

The fulfilment of tax obligations for the payment for emissions into the environment does not exempt the nature user from compensation for damage to the environment.

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