Kazakhstan proposes improving business taxation, cancelling apartment owners’ land tax

NUR-SULTAN – The Kazakh Interdepartmental Commission on Legislative Activities discussed the concept of a draft law July 30 introducing amendments and addenda to certain legislative taxation acts to attract investments, develop the business environment and improve tax administration.

Photo credit: kazpravda.kz.

The changes are grouped in seven blocks. The first involves simplifying tax payments to individuals and abolishing the land tax for apartment building owners, according to Vice Minister of National Economy Madi Takiyev.

“Taxes on property and land from individuals will be combined without changing the elements of taxation – object of taxation, tax base, rates, calculation and payment procedure. Two taxes will be paid in a single payment,” he said.

To ensure the timely receipt of taxes to the fourth level budget, the draft proposes postponing the payment deadline, including transport tax, until April 1.

The second block focuses on expanding the tax base. It suggests strengthening the fiscal function of excise taxes and collecting value added tax (VAT) from foreign companies that provide electronic services to Kazakh individuals. The draft also proposes introducing a ban to deducting the corporate income tax expense in cash in more than 1,000 monthly calculation indices (MCI) (2.5 million tenge or US$ 6,517).

The third block focuses on attracting investments. It introduces an investment tax credit, reimburses investor-participant costs to build infrastructure in special economic zones, the possibility of filing investment disputes with the Astana International Financial Centre and raising the status of the investment ombudsperson’s decisions with its mandatory consideration.

The fourth block focuses on stimulating production and transit by exempting dealers from VAT on vehicles or agricultural machinery purchased from domestic manufacturers without VAT, as well as producing vehicle components. It also provides preferential taxation for manufacturing cotton fibre, processing sugar beets and producing confectioneries and yeast and extends the current procedure for calculating the single land tax for the agricultural sector through 2023.

The fifth block of amendments includes measures to clear bad loans from mortgage companies, exempt shares sold from individual income tax gains and increase the investment attractiveness of mutual investment funds.

The sixth block includes a capital expense deduction for subsoil users to purchase sulfuric acid and exemption from the mineral extraction tax to utilise groundwater extracted with hydrocarbons.

The final block includes norms to improve tax and customs administration.

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