Amendments to laws on TV and radio broadcasting
in Kazakhstan to be entered in 2016 and 2017
Amendments to the Kazakhstan legislation on broadcasting
In October-November 2015 the Kazakhstan legislation on broadcasting was amended twice. The amendments related to the distribution of advertising on foreign TV and radio channels that are rebroadcasted in Kazakhstan, as well as the activities of foreign TV and radio broadcasting companies in the territory of the Republic of Kazakhstan starting from 2017.
Ban on advertising
The ban on advertising on foreign TV and radio channels rebroadcasted to the territory of Kazakhstan gave rise to a heated discussion among the parties concerned. This ban was to come into force as of January 1, 2016. The obligation to implement the ban and liability for violation of this ban was imposed on TV and radio broadcasting operators of Kazakhstan.
TV and radio broadcasting operators of Kazakhstan and foreign channels stood together against the prompt implementation of the ban on advertising (the government has provided only one month to comply with this amendment to the legislation in the part of advertising on foreign channels), as well as against the ban itself. In December 2015, consultations of the media industry and state bodies of Kazakhstan with regard to the ban on advertising were held. During the consultations two major obstacles to the implementation of the ban on advertising in the beginning of 2016 were discussed.
The infrastructure available for rebroadcasting of foreign channels in Kazakhstan does not allow to automatically exclude advertisements during the transmission of the signal to the consumer. Elimination of advertising has to be done manually. This means that the rebroadcasting must be monitored 24 hours a day by a person who at the time of advertising must insert a banner when an advertisement appears. To ensure monitoring of one channel 24 hours a day, at least 3 people must be engaged. Many TV and radio broadcasting operators are not able to bear such burden of costs.
In addition to the technical problems, there are also legal uncertainties on how to implement the new requirements related to advertising. Apart from advertising of goods, works and services, the possibility of distribution of the following information in rebroadcasting of foreign TV and radio channels is questionable: promotional videos about the TV and radio channel, about the programs of such channel transmitted by one channel about another channel, and information messages on upcoming programs on a specific TV and radio channel (announcements).
Due to a broad definition of the concept of «advertising» in Kazakhstan legislation promotional videos may be considered advertising.
As for announcements, Mr. Issekeshev, the Minister of Investment and Development of the Republic of Kazakhstan, pointed out in his blog that announcements are also advertising. The authors of this article are of the opinion that announcements are similar to program schedules and only inform the viewers on the upcoming programs. Announcements do not form or keep up motivation in respect of the producer, services or trademarks of the producer- owner of the channel (these criteria are crucial in the definition of the concept of «advertising»). The viewers already constitute the audience of a specific channel.
As a result of the approach of Kazakhstan TV and radio broadcasting operators and foreign media companies to the state authorities, it was decided to set up a moratorium on the ban on advertising for 6 months. The moratorium should give the government time to make a balanced decision on the issue of the ban on advertising on foreign rebroadcasting channels.
As of today there is no statutory act which would set up a moratorium on the ban on advertising. At the moment we have only oral comments of the officials of the Committee for Communication, Informatization and Information of the Ministry of Investment and Development of the Republic of Kazakhstan (the «Communications Committee») on the fate of the amendments introduced in 2015 into the legislation on broadcasting regarding advertising.
· A moratorium on the ban on advertising on foreign TV and radio channels has indeed been introduced for 6 months until 1 July 2016. The moratorium is introduced in order to give TV and radio broadcasting operators time for purchasing the necessary equipment for exclusion of advertisements on foreign channels in an automatic mode.
· According to the Communications Committee, it will not initiate lifting of the previously introduced ban on advertising on foreign channels.
· In the period of the moratorium, the Communications Committee in conjunction with other government agencies, as necessary, will prepare draft amendments to the Kazakhstan legislation on advertising, as well as bylaws intended to narrow the definition of «advertising», in order to exclude, for example, announcements from advertising. We will see whether promotional videos will be excluded from the concept of «advertising».
The newly adopted statutory acts do not impose specific liability for violation of the ban on rebroadcasting of advertising. TV and radio operators in Kazakhstan would bear general liability for any violation of the rules for retransmitting a TV or radio channel. Liability for this violation is provided for in the form of a fine in the amount ranging from, approximately, US$650 to $2,600.
No liability of foreign TV and radio companies has been established.
To transmit foreign TV and radio channels in Kazakhstan, establish a representative office or a company
The Law On Amendments to Some Legislative Acts on Informatization in Kazakhstan (the «Informatization Law») was published on 26 November 2015. The Informatization Law, inter alia, amends the TV and radio broadcasting legislation.
The Informatization Law obliges the owners of foreign TV and radio channels, which rebroadcast TV and radio channels to the territory of the Republic of Kazakhstan, to establish a representative office of the company in Kazakhstan.
The viewpoint of the Ministry of Investment and Development of the Republic of Kazakhstan in respect of the obligation for registration of a foreign media company in Kazakhstan suggests that the new regulation was adopted primarily in order to ensure a possibility of bringing a foreign legal entity to administrative liability. Foreign legal entities who committed administrative offenses in the territory of Kazakhstan are subject to administrative liability in Kazakhstan on a common basis. However, in Kazakhstan in the absence of international agreements on mutual assistance in civil, administrative and criminal cases between partner countries, it is not possible to bring a foreign legal entity to liability.
Foreign TV and radio companies, which have in their charter capital state involvement (full or partial), as well as their affiliate media companies are subject to a special regulation. They can continue to broadcast the channels to the territory of the Republic of Kazakhstan only after creation of a legal entity in Kazakhstan. At the same time, participation of foreign entities in the charter capital of such legal entity may not exceed 20% of the shares or participation interests. Foreign citizens or stateless persons may not be the heads or chief editors of such mass media.
About representative offices of foreign entities in Kazakhstan
Under Kazakhstan law, a representative office is a structural unit of a parent company in other location. A representative office often performs the functions of market research, represents and protects the interests of the parent company and does not carry out any commercial activities. A representative office does not have its own property; the property used by a representative office is considered to be the property of the parent company. In civil relations a representative office acts on behalf of the parent company.
With regard to taxation, a representative office is a non-resident of the Republic of Kazakhstan. Consequently, a representative office pays taxes which are not associated with the income of the foreign legal entity (for instance, individual income tax, social tax, vehicle tax, in case of existence of items of taxation).
If a foreign media-company intends to use the entity it creates for the purpose of doing business in Kazakhstan, then it is possible to consider the possibility of establishment of a branch or a subsidiary of the foreign entity. This choice is available only to the media companies without state participation in the charter capital.