Kazakhstan has introduced a revised mechanism governing mandatory research and development (R&D) contributions from subsoil users, shifting control over funding allocation to the state and triggering concerns within the mining industry over rising fiscal pressure.
Although the requirement for subsoil users to allocate 1 percent of revenues toward research and development has long been established under the Code on Subsoil and Subsoil Use, significant changes to its implementation came into force in 2026. Under the updated model, companies are no longer permitted to fulfil R&D obligations independently and must now transfer funds directly to the republican budget in accordance with the Budget Code.
The Ministry of Industry and Construction stated that the reform aims to improve transparency and centralise funding management. Contribution levels will be calculated based on companies’ actual operational results from the previous year, meaning 2026 payments will reflect 2025 performance indicators. R&D obligations arise from the second year of a mining licence for solid mineral extraction.
While subsoil users retain the right to propose research programmes, project implementation and financing decisions are now determined by government procedures. The Ministry’s Scientific and Technical Council plays a central role by defining priority research areas, reviewing proposed technical assignments and approving projects before they proceed to competitive selection overseen by the authorised science body.
Council decisions are adopted through open electronic voting within the National Innovation System’s “Single Window” platform operated via Astana Hub, requiring quorum participation and a two-thirds majority.
As a result, mining companies no longer directly determine which projects receive funding, with final allocation dependent on state-led approval and budgetary procedures.
Industry representatives have raised concerns over the practical impact of the reform. Geological and geophysical expert Abzal Kenessary of Qazaq Expert Club noted that while the new rules close a longstanding regulatory gap by establishing clearer financing procedures, the model risks creating structural imbalances.
According to the expert, subsoil users primarily require applied research in geology, mining, metallurgy and environmental technologies, whereas Astana Hub has traditionally focused on IT startups, digitalisation and fintech initiatives. Businesses are therefore awaiting clarification on project eligibility criteria to ensure R&D funding is not disproportionately directed toward digital projects at the expense of industrial innovation.
Kenessary added that from a business perspective, the mandatory transfer of 1 percent of annual contract revenue effectively functions as a quasi-tax, representing an additional compulsory payment linked to company income. Companies are likely to factor the obligation into project economics and investment attractiveness assessments.
Experts suggest the new R&D framework could deliver long-term benefits if several conditions are met, including sector-specific project selection criteria, independent monitoring of technological outcomes rather than financial transfers alone, and structured feedback mechanisms allowing subsoil users to influence priority research areas.
Without these safeguards, analysts warn the reform risks becoming a redistribution mechanism rather than a driver of technological development in Kazakhstan’s mining sector.
