KAZAKHSTAN: APPROVAL OF TAX- AND DUTY-EXEMPT DOE

UNCLAS ALMATY 002589

SIPDIS

DOE FOR DOE/NNSA, J. MCKISSON
STATE FOR EUR/PRA
CD&TR FOR BOREN
DTRA FOR FOSTER

SENSITIVE

E.O. 12958: N/A
TAGS: ENRG KNNP KZ ECONOMIC
SUBJECT: KAZAKHSTAN: APPROVAL OF TAX- AND DUTY-EXEMPT DOE
SHIPMENT TO ULBA METALLURGICAL PLANT

REF: A) 6/1/05 Mennuti-McKisson email B) 04 State 185113


1. (SBU) Summary: Ten months after the U.S. first requested
confirmation of tax and customs exemptions for a DOE
shipment to the Ulba Metallurgical Plant (Ref B),the MFA
has forwarded a letter from the Tax Committee stating that
the shipment will be exempt. End summary.


2. (SBU) On June 24, Embassy Almaty received dipnote 09/1-
3/2530 from the Ministry of Foreign Affairs, transmitting a
copy of a May 3 letter from N. Usenova, Vice-Chairman of the
Tax Committee, Ministry of Finance, to Vladimir Shkolnik,
Minister of Energy and Mineral Resources, regarding
Shkolnik's January 12 request that the Tax Committee exempt
a proposed DOE shipment of equipment to the Ulba
Metallurgical Plant from all taxes and customs duties. The
letter confirmed that the shipment would be exempt from tax
and other compulsory payments to the budget.


3. (SBU) Embassy translation follows:

//BEGIN TEXT OF TRANSLATION//

May 3, 2005

From the Tax Committee of the Ministry of Finance of the
Republic of Kazakhstan

To the Ministry of Energy and Mineral Resources of the
Republic of Kazakhstan

The Tax Committee of the Ministry of Finance of the Republic
of Kazakhstan, having examined the letter of the Ministry of
Energy and Mineral Resources of the Republic of Kazakhstan
from January 12, 2005 # 10-04-178 concerning exemption from
tax and other compulsory payments to the budget of equipment
for accounting and control of nuclear materials delivered by
the U.S. Department of Energy for the Ulba Metallurgical
Plant and on the basis of the letter of the Ministry of
Foreign Affairs of the Republic of Kazakhstan from April 20,
2005 #10/2-1-967, notifies the following.

The agreement between the Republic of Kazakhstan and the
U.S. concerning intercontinental ballistic missile silo
launchers disposal, incident damage control and prevention
of nuclear weapons proliferation from December 13, 1993
(further as Agreement) was ratified by the Law of the
Republic of Kazakhstan of June 3, 2002.

In accordance with Article II of the Agreement, each Party
appoints an Executive body to implement the Agreement. The
Ministry of Defense of the RK is the executive body for the
Republic of Kazakhstan, and the U.S. Department of Defense
is the executive body for the U.S.

The aims of the Agreement are the destruction of
intercontinental ballistic missile silo launchers; taking
measures to prevent the proliferation of nuclear weapons, as
well as related technology, material, technical devices, and
know how from the Republic of Kazakhstan; enhancement of
emergency response capability in connection with the
withdrawal of nuclear weapons from RK for destruction; and
rendering other assistance connected with the elimination of
strategic offensive arms in the Republic of Kazakhstan.

According to Point 1 of Article III of the Agreement, to
achieve the outlined goals, the Parties will conclude via
their executive bodies agreements on implementation,
ratification of which has not been determined by the
Agreement.

Within the framework of implementing the Agreement, an
interagency agreement was concluded between the Ministry of
Defense of the RK and the U.S. Department of Defense on
December 13, 1993 concerning the control, accounting, and
physical protection of nuclear materials to support the
prevention of nuclear weapons proliferation, which is an
implementing agreement.

Consequently, the implementing agreement concluded by the
Executive bodies of the Parties and aimed at the realization
of the goals stated in Article I of the Agreement comes
under the provisions of the Agreement.


Point 2 of Article IX of the Agreement states that the U.S.
can bring into the RK any material and technical devices
which are necessary for implementation of the Agreement.

According to the letter, the U.S. Department of Energy plans
at the request of the International Atomic Energy Agency
(IAEA) to provide the Ulba Metallurgical Plant with
equipment for the accounting and control of nuclear
material. The Ministry of Energy and Mineral Resources of
the Republic of Kazakhstan also notes that this delivery is
taking place within the framework of the implementing
agreement.

On the grounds of the abovementioned, delivery of the
mentioned equipment by the U.S. Department of Energy is
subject to exemption from tax and other compulsory payments
to the budget.

First Vice-Chairman of the Tax Committee of the Ministry of
Finance of the Republic of Kazakhstan N. Usenova

//END TEXT OF TRANSLATION//


4. The dip note will be emailed to EUR/CACEN, EUR/PRA, and
DOE.


ORDWAY


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