Kazakh Parliament Considers Tax Code Reforms to Boost Revenue and Combat Unfair Competition
Government Initiatives Discussed in Kazakh Parliament Committee on Finance and Budget
The Mazhilis Committee on Finance and Budget in Kazakhstan recently discussed new government initiatives to the draft Tax Code, including proposed adjustments to the Value Added Tax (VAT). The draft Tax Code has been in development since last year, with numerous working group meetings focusing on key taxes such as VAT, corporate tax, and tax administration.
Deputy Minister of National Economy Azamat Amrin presented the new proposals, highlighting the need to increase the revenue of the consolidated budget of Kazakhstan. According to the International Monetary Fund, the current revenue level of the budget is relatively low compared to the GDP. To address this issue, one of the proposed changes is to reduce the VAT registration threshold to 15 million tenge (~US$29,784) in order to tackle unfair competition.
Amrin explained that the current threshold of 78 million tenge (~US$154,880) allows medium-sized entrepreneurs to artificially split their businesses to avoid VAT payments. By lowering the threshold, businesses will be discouraged from engaging in such practices, ultimately reducing unfair competition in the market.
In addition to the VAT threshold adjustment, the government is also considering raising the VAT rate from 12% to 16% and introducing a reduced rate of 10% for certain sectors such as pharmaceuticals, medical services, and essential food products. There are also discussions about providing VAT exemptions for the media and the agro-industrial complex.
President Kassym-Jomart Tokayev has instructed further study on the issue, emphasizing the importance of implementing a differentiated VAT rate. These proposed changes are part of broader efforts to improve the tax and budget systems in Kazakhstan. It is hoped that these initiatives will help increase revenue collection and promote a fair and competitive business environment in the country.
