Kazakhstan exempts micro and small businesses from taxes for three years

NUR-SULTAN – President Kassym-Jomart Tokayev signed a law exempting micro and small businesses from taxes for three years Dec. 28.

Photo credit: nur.kz.

The law, “On introducing amendments and additions to some legislative acts of the Republic of Kazakhstan on improving the procedures for rehabilitation and bankruptcy, budget, tax legislation and legislation on railway transport,” frees certain taxpayers of their tax burdens starting Jan. 1 until Jan. 1, 2023.

According to the Kazakh Ministry of National Economy, the exemption targets micro and small businesses. More than 1.2 million micro and small business entities will be eligible for income tax exemption, allowing the businesses to save over 380 billion tenge (US$1 billion) in three years and channel those funds instead into business development.

Income tax includes corporate income tax for legal entities, individual income tax for individual entrepreneurs, unified land tax for farms and social tax for entrepreneurs operating on special tax regimes. All other taxes and fees, such as pensions and medical insurance, remain.

The tax exemption applies only to micro and small businesses that use special tax regimes such as simplified declaration.

The new law defines micro business as individual entrepreneurs with no more than 15 employees and with annual incomes up to 30,000 Monthly Calculation Indices (MCIs), which amounts to 79.5 million tenge (US$210,000). Small businesses are defined as individual entrepreneurs and legal entities with up to 100 employees and an annual income up to 300,000 MCIs, which is 795 million tenge (US$2.1 million).

Not all businesses can take advantage of the change, as certain fields are excluded. They include production and wholesale of excisable products, auditing, professional work in the stocks and bonds market, credit bureaus, security, foreign economic activity, banking or certain types of banking operations and activities in the insurance market (except for insurance agents). Grain storage at grain receiving points; coal, oil and other mineral sales; subsoil use; retail gasoline; and diesel fuel and fuel oil sales are on the list of excluded types of activities as well. It also includes activities related to narcotic drugs and psychotropic substances turnover, lotteries, gambling, activities related to circulating radioactive material, and activities related to circulating military and civilian weapons and their ammunition.

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