Kazakhstan Plans VAT Adjustments and Tax Reforms
Kazakhstan is working to overhaul its tax system with a new Tax Code under discussion in Parliament, as announced by Deputy Prime Minister and Minister of National Economy Serik Zhumangarin during an expanded government meeting on January 28, chaired by President Kassym-Jomart Tokayev.
The government plans to increase the VAT rate, which currently accounts for over 24% of total tax revenue. This change will be part of broader efforts to improve the country’s tax and budget systems.
“Due to the increase in the VAT rate, businesses will naturally incur additional costs. The state is ready to compensate them,” Zhumangarin assured.
Currently, only 137,700 taxpayers—about 6% of Kazakhstan’s 2.3 million registered taxpayers—pay VAT. However, just 88,000 of these, or 4%, actually contribute to VAT. This is largely due to the high VAT registration threshold of 78 million tenge (approximately US$149,874).
Additionally, the government is addressing the high burden on the wage fund, which stands at around 40%.
“Therefore, we propose to reduce the VAT threshold to 15 million tenge (US$28,822). Today, 80% of SMEs operate within these limits, so this will not have a serious impact on most SMEs,” Zhumangarin said.
The finalization of the new VAT rate is expected by mid-February.
“If the VAT rate increases to the planned level, we are ready to significantly reduce the burden on the wage fund by an average of 10% to 30% by eliminating the social tax and mandatory employer pension contributions. The budget will be able to cover these costs,” Zhumangarin stated.
Photo credit: Akorda
