ASTANA – Kazakhstan is set to rebalance its tax system with a new Tax Code currently under discussion in Parliament, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin announced during an expanded government meeting on Jan. 28 chaired by President Kassym-Jomart Tokayev, reported the Prime Minister’s press service.
Serik Zhumangarin. Photo credit: Akorda
Value-added tax (VAT), one of the primary sources of tax revenue, accounts for more than 24% of the total. The government plans to increase the VAT rate, emphasizing that this will be paired with broader measures to improve the 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—just 6% of Kazakhstan’s 2.3 million registered taxpayers—are VAT payers. Among these, only 88,000, or 4%, actually pay VAT. One reason for this is the high VAT registration threshold, set at 78 million tenge (US$149,874).
“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.
He noted that a major hurdle for Kazakhstan’s economy is the high burden on the wage fund, which stands at approximately 40%.
“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.
According to the Minister, the government will finalize the new VAT rate no later than by mid-February.
