Entrepreneur Believes Kazakhstan’s High Taxes Driving Investors to Kyrgyzstan and Uzbekistan

Kazakhstan is losing its investment appeal due to an overly strict tax policy and is falling behind its neighbors, Kyrgyzstan and Uzbekistan, in attracting business. This is the conclusion of Gulbanu Maigarina, a Kazakh entrepreneur and chair of the Central Asian Franchising Association, Orda.kz reports.

On her Facebook page, Maigarina published a detailed breakdown of the tax burden from 2026 in Kazakhstan, Kyrgyzstan, and Uzbekistan. Below is her text with minimal edits.

While Kyrgyzstan and Uzbekistan are lowering costs and giving investors confidence, Kazakhstan is raising indirect taxes and keeping high rates for SMEs. For capital, the choice is obvious.

We are becoming unprofitable for investors!

Step by Step with Numbers

Kazakhstan (from January 1, 2026):

• VAT: 16% (up from 12%); registration threshold — 10,000 MCI (about 39.32 million tenge).
• Corporate Income Tax (CIT): 20% (25% — banks and gambling; social sector: 5% in 2026, 10% from 2027; agro-industrial complex — effective 3%).
• Individual Income Tax: Progressive 10% / 15%; basic deduction of 30 MCI.
• Special Tax Regimes:

– Self-employed: 0% income tax + social contributions of 4% of income (up to 300 MCI/month).
– Simplified system: 4% of turnover (limit up to 600,000 MCI/year; local authorities may cut by up to 50%).
– Luxury Tax: Property worth more than 450 million tenge — 2% on the excess (min. 2,946,600 tenge).

Kyrgyzstan (decrees of August 4–5, 2025):

• Tax amnesty: write-off of tax arrears up to January 1, 2022; moratorium on audits for this period (with some exceptions).
• Property tax (cars): abolished.
• Land tax for agricultural land: zero rate extended.
• Single tax:

– Trade — 0.5% of revenue (threshold raised to 50 million soms).
– Production/sale of jewelry — 0.25%.
– “Impersonal entities” — sales tax of 4%.
– Rates of 0.1% and 1% abolished.

Uzbekistan (from January 1, 2026):

• Individual entrepreneurs and self-employed with turnover up to 1 billion soums — turnover tax of 1%.
    

Comparison per “every 100 units of revenue” — small business (retail, catering, services under simplified regime):

• Kazakhstan: 4 units of tax per 100 units of revenue (best case with reduction — 2 units).
• Uzbekistan: 1 unit.
• Kyrgyzstan: 0.5 units (trade).

Gap: Kazakhstan is 4–8 times more expensive than its neighbors for SMEs on turnover tax alone.

Business Based on Profit (Assuming 10% Margin)

• Kazakhstan: CIT 20% of profit ⇒ 2 units per 100 units of revenue (20% × 10% = 2%).
• Uzbekistan: 1 unit (fixed 1% turnover).
• Kyrgyzstan: 0.5 units (trade; some sectors — 0.25%).

Margin sensitivity:

• At 5% margin: Kazakhstan’s effective “CIT price” ≈ 1% of revenue (same as Uzbekistan’s 1%, double Kyrgyzstan’s 0.5%).
• At 15% margin: ≈ 3% of revenue (3× Uzbekistan, 6× Kyrgyzstan for single tax on trade).

VAT and Final Prices

• Kazakhstan: VAT 16% (up from 12%) — pressures final prices/margins in B2C sectors. VAT threshold of 10,000 MCI (≈ 39.32 million tenge) — below this, companies avoid VAT, but for growing businesses, the barrier comes quickly.
• Uzbekistan & Kyrgyzstan: Focus on low turnover rates and simpler administration; VAT-related price pressure is less of a reform priority than in Kazakhstan.

Administration and Regulatory Risks

• Kazakhstan: Announces reduced reporting and some benefits, but net fiscal tightening from VAT hike and lack of deep SME rate cuts.
• Kyrgyzstan: Strong “trust signals” — debt amnesty, audit moratorium for past periods, simple rates of 0.5% / 0.25%.
• Uzbekistan: Even simpler — flat 1% turnover tax for individual entrepreneurs; predictable costs.

Why Kazakhstan Is Losing Investors Now

1. Higher tax cost of growth: SMEs quickly hit the 16% VAT threshold and pay 4% of turnover (even with 50% reduction, still 2–4× pricier than neighbors).

2. Retail and catering lose price edge: VAT 16% directly impacts B2C final prices, hurting turnover and margins in regional competition.

3. Weaker “trust agenda”: Compared to amnesties, moratoriums, and ultra-simple rates elsewhere, Kazakhstan appears heavier in fiscal burden with fewer entry incentives.

4. Red flags for capital-intensive projects: Luxury tax from 450 million tenge threshold adds permanent cost for certain assets (e.g., high-end commercial real estate), seen by investors as raising ownership costs.

5. Sectoral preferences don’t offset the overall picture: While social sector and agriculture get benefits, the bulk of SMEs — the backbone of investment inflow — face persistently higher rates.

Bottom line: In the 2026 Kazakhstan–Kyrgyzstan–Uzbekistan triangle, Kazakhstan is shaping up to be the most expensive, least SME-friendly option — a position that could see investment flow elsewhere.

Original Author: Nikita Drobny