Kazakhstan Updates VAT and Tax Thresholds
Kazakhstan Plans to Rebalance Tax System with New Tax Code
Kazakhstan is gearing up to overhaul its tax system with the introduction of a new Tax Code that is currently being discussed in Parliament. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin made the announcement during an expanded government meeting on Jan. 28, which was chaired by President Kassym-Jomart Tokayev.
One of the key changes proposed in the new Tax Code is an increase in the value-added tax (VAT) rate, which is a major source of tax revenue and currently accounts for more than 24% of the total. The government aims to implement this increase as part of broader measures to enhance the overall tax and budget systems.
Zhumangarin emphasized that businesses will incur additional costs due to the rise in the VAT rate, but the state is prepared to provide compensation to offset these expenses. At present, only a small percentage of taxpayers in Kazakhstan are VAT payers, with the high VAT registration threshold being a contributing factor.
To address this issue, the government is proposing to lower the VAT threshold from 78 million tenge to 15 million tenge. This change is expected to have a minimal impact on the majority of small and medium-sized enterprises (SMEs) in the country, as 80% of them operate within the proposed threshold.
Another significant issue facing Kazakhstan’s economy is the high burden on the wage fund, which currently stands at around 40%. In light of the planned increase in the VAT rate, Zhumangarin announced that the government is prepared to reduce the burden on the wage fund by eliminating the social tax and mandatory employer pension contributions by an average of 10% to 30%.
The Minister assured that the government will finalize the new VAT rate by mid-February. These proposed changes are aimed at improving the efficiency and fairness of Kazakhstan’s tax system, ultimately supporting the country’s economic growth and development.
