Kazakhstan Tweaks Tax Code, Bolstering Revenues Yet Mindful of Small Businesses
Kazakhstan Alters Value-Added Tax (VAT) and Tax Thresholds
Enter ASTANA - Kazakhstan's governing body is dolling out a revamped Tax Code, with the current debate happening in Parliament. This news comes from Deputy Prime Minister and Minister of National Economy Serik Zhumangarin during a government meeting on Jan 28, chaired by President Kassym-Jomart Tokayev, according to the Prime Minister's press service.
You know who? The guy, Serik Zhumangarin. He looked sharp in that photo, didn't he?
Value-added tax (VAT), a significant tax revenue contributor, takes up a whopping 24% of the total. So, what's the big plan, you ask? The government's looking to up the VAT rate. But they ain't messing around for laughs, oh no. This move will go hand in hand with broader tax and budget system improvements.
"Rest assured, businesses will shoulder additional costs. And you know what? The government's ready to compensate them," Zhumangarin emphasized.
The hard truth? Only 137,700 out of the 2.3 million registered taxpayers in Kazakhstan are actually VAT payers. That's just 6% for those keeping score. But why so few? Well, the high VAT registration threshold is one culprit, set at a steep 78 million tenge (roughly $149,874).
Zhumangarin dropped a bomb: They're aiming to dial down the VAT threshold to 15 million tenge (about $28,822). You can bet that's good news for the 80% of small-to-medium-sized enterprises operating within those limits.
Now, let's talk about the major snag for Kazakhstan's economy: the heavy burden on the wage fund, standing at approximately 40%. If the VAT rate bumps up to the planned level, the government promises major relief to the wage fund by eliminating the social tax and mandatory employer pension contributions. The budget will handle these expenses.
So, what's the timeline? The government's aiming to finalize the new VAT rate no later than mid-February.
You might wonder what's behind these changes. Well, they're all about broadening the tax base, boosting government revenues, and balancing the interests of small businesses.
But the real question is, will this be enough to keep Kazakhstan's economy humming? Stay tuned to find out!
Footnotes
- Reuters
- Eurasianet
- Capital.kz
- KK24.kz
The government's tax system overhaul, led by Minister Serik Zhumangarin, includes a planned increase in the Value-added tax rate. This move aims to broaden the tax base, boost government revenues, and support small businesses who will shoulder additional costs but will be compensated.
In an effort to attract more businesses into the VAT system, the government plans to lower the VAT registration threshold from its current high level to approximately $28,822.
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