ASTANA – New government initiatives to the draft Tax Code, including VAT adjustments, were discussed in the Mazhilis (the lower house of the Kazakh Parliament) Committee on Finance and Budget on Feb. 27.
Photo credit: Shutterstock
The draft Tax Code has been under development in the Mazhilis since last year. To date, 27 working group meetings have already been held, including eight thematic discussions affecting key taxes: value added tax, corporate tax, taxation in the field of subsoil use, tax administration, and others.
Presenting the new proposals of the government, Deputy Minister of National Economy Azamat Amrin reported that, according to the International Monetary Fund, the volume of revenues of the consolidated budget of Kazakhstan in 2022-2023 reached only 23% of the gross domestic product (GDP). In international comparison, this is a rather low figure.
Amrin explained the decision to reduce the VAT registration threshold to 15 million tenge (US$29,784), aiming to eliminate unfair competition, reported Kazinform on Feb. 28.
According to him, this level is set considering economic feasibility. Currently, the threshold is 78 million tenge (US$154,880), and medium-sized entrepreneurs whose income reaches 500 million tenge (US$992,820) and above artificially split their business, registering 13-15 companies to avoid paying VAT.
“By lowering the threshold to 15 million tenge, businesses will have to split up even more, which will increase administration costs. Ultimately, this becomes unprofitable. Thus, we are bringing businesses out of the shadows, where they are now, creating unfair competition for those who work honestly,” said Amrin.
The ministry is also exploring the possibility of raising the VAT rate from 12% to 16%, while introducing a reduced rate of 10% for the pharmaceutical sector, medical services, and essential food products. Additionally, it is considering VAT exemptions for the media and the agro-industrial complex.
The government announced plans to adjust VAT and tax thresholds as part of broader measures to improve the tax and budget systems. President Kassym-Jomart Tokayev has instructed further study on the issue, emphasizing the need for a differentiated VAT rate.
