Entrepreneurial Activity of Citizens
🔷 I. GENERAL CHARACTERISTICS
Article 19 of the Civil Code of the Republic of Kazakhstan regulates the right of citizens to engage in entrepreneurial activity without forming a legal entity, i.e., as individual entrepreneurs (IE).
This provision establishes:
- the right of a natural person to be a business entity;
- the mechanism of state registration;
- the application of commercial regulations;
- the obligation to obtain a license in certain fields.
🔹 II. RIGHT TO ENGAGE IN ENTREPRENEURSHIP (Clause 1)
“Citizens have the right to engage in entrepreneurial activity without establishing a legal entity...”
🔸 This means:
- a citizen may independently conduct business without forming an LLP or JSC;
- they act in their own name and bear personal liability with their property.
📌 Example: A hairdresser opens a salon and registers as an IE. They do not establish a legal entity but officially become an entrepreneur.
📌 Restrictions:
- it is prohibited to engage in certain types of activities without forming a legal entity (e.g., banking or insurance).
📚 See also:
- Entrepreneurial Code of RK, Articles 31–37 — on the grounds, forms, and registration of IEs;
- Law of RK “On Permits and Notifications” — licensing rules.
🔹 III. STATE REGISTRATION OF IE (Clauses 2 and 4)
“...consists of registering as an individual entrepreneur...”
🔸 IE registration is a unified procedure that includes:
- submitting a notification to the Government for Citizens Corporation (Public Service Centers);
- entry into the IE register;
- obtaining a Business Identification Number (BIN), assigning a tax regime.
📌 Forms of IE registration:
- Simplified regime — notification-based, for solo entrepreneurs;
- General regime — if there are employees or turnover exceeds threshold;
- Patent-based — for limited types of activity, only without employees.
📌 Legal basis: Article 34 of the Entrepreneurial Code of RK.
🔹 IV. APPLICATION OF COMMERCIAL REGULATIONS (Clause 3)
“...rules regulating the activities of legal entities apply, unless otherwise provided...”
🔸 This implies:
- legal analogy — if there’s no direct rule for IEs in the Civil or Entrepreneurial Code, regulations for commercial entities apply;
- key distinction: IEs are personally liable with all their property, while legal entities are liable only within their charter capital.
📌 Example: Rules on invalid transactions, protection of trade secrets, anti-corruption obligations, etc., apply to IEs by analogy.
🔹 V. LICENSING OF IE ACTIVITIES (Clause 5)
“...is obliged to have a license...”
🔸 IEs engaged in licensed types of activities must obtain a license.
📌 Examples of licensed fields:
- pharmaceutical and medical services;
- passenger transportation;
- educational services;
- private security services.
📚 See also:
- Law of RK “On Permits and Notifications” (Articles 14–16);
- Government Decree No. 108 (2015) — list of licensed activities.
🔸 The government may establish a simplified licensing procedure for low-risk IE activities.
📌 Example: A jeweler must have a license to work with precious metals.
🔷 VI. CASE LAW
🔹 Case 1: The court upheld damages against an IE engaged in transportation without a license. The activity was declared illegal, despite registration.
🔹 Case 2: An IE contested a tax authority's claim, arguing they acted as a private individual. The court ruled that a registered IE cannot refer to private status, even when expenses are personal.
🔷 VII. RELATED PROVISIONS
| Norm | Description |
|---|---|
| Civil Code of RK, Arts. 10, 11, 36 | Protection of entrepreneurs’ rights, prohibition of unfair competition |
| Entrepreneurial Code, Arts. 31–39 | Forms, regimes, and registration of IEs |
| Law "On Permits and Notifications" | Licensing procedures |
| Tax Code of RK | Special tax regimes for IEs |
| Law "On Commercial Secrets" | Applicable to IEs |
🔷 VIII. INTERNATIONAL APPROACHES
🔸 Similar IE regimes exist across EAEU countries:
- Russia — individual entrepreneur status;
- Kyrgyzstan — patent and IE;
- Belarus — craftsmen and IE.
🔸 General trend — simplified registration and minimal entry barriers.
🔷 IX. CONCLUSION
Article 19 of the Civil Code of the Republic of Kazakhstan establishes:
- the right of citizens to engage in entrepreneurship without forming a legal entity;
- mandatory state registration as an IE;
- application of rules on commercial organizations by analogy;
- licensing requirements for certain activities.
This serves as a foundation for small business development, self-employment, and economic freedom for citizens.
Attention!
Law and Law Law Law draws your attention to the fact that this document is basic and does not always meet the requirements of a particular situation. Our lawyers are ready to assist you in legal advice, drawing up any legal document suitable for your situation.
For more information, please contact a Lawyer / Attorney by phone: +7 (708) 971-78-58; +7 (700) 978 5755, +7 (700) 978 5085.
Attorney at Law Almaty Lawyer Legal Services Legal Advice Civil Criminal Administrative Cases Disputes Protection Arbitration Law Firm Kazakhstan Law Office Court Cases
