Experts Explain Why Toqayev’s Tax Breaks Won’t Save Businesses

Kazakhstan’s new Tax Code, set to take effect on January 1, 2026, has become one of the most debated topics of the fall, Orda.kz reports. Experts have voiced their concerns online, arguing that even the president’s recent intervention will not be enough to rescue entrepreneurs.

Despite the government’s assurances of “beneficial reform,” both the business community and experts continue to sound the alarm. Particularly contentious is Clause 16 of Article 286, which prohibits companies from deducting expenses when working with suppliers under a simplified tax regime.

On paper, it appears minor. In practice, it could disrupt the entire system of business relations. Small businesses risk losing large partners, while larger companies lose tax deductions on such transactions. Ultimately, everyone is affected: businesses lose revenue, consumers face higher prices, and the government risks seeing companies move into the shadow economy.

Questions Remain

Mounting tensions around tax reform prompted President Toqayev to step in. However, lawyer Yerzhan Yessimkhanov says these measures fail to address the core issue, creating only an illusion of change.

The main news of recent days is that the president intervened in the tax reform situation. He publicly reprimanded the prime minister, who quickly announced several measures meant to improve conditions for everyone — including notable concessions to the tax changes we’ve discussed all year, Yessimkhanov noted.

According to him, authorities have reinstated the previous list of activities eligible under the simplified tax system and temporarily suspended inspections of small businesses. Yet the underlying risks remain.

There were no comments regarding the main problem that many SMEs will face from the beginning of 2026. Large companies, including retail chains, are already asking their SME suppliers to switch to the general tax regime because they won’t be able to deduct expenses,  the lawyer explained.

As a result, major companies are already changing the rules, pressuring small businesses to abandon the simplified system.

Even before Clause 16 takes effect, the market is adjusting in anticipation of new restrictions.

Prices Have Already Risen

Tax concerns are not the only issue. According to Yessimkhanov, businesses have already felt the impact of the reform, through price increases.

Prices have already gone up. And that’s not my speculation — those are the words of Zhumangarin, the main spokesperson for the tax reform. On September 24, he said, and I quote: ‘Already this year, most producers and market traders have factored the upcoming increase from January 1 into the prices of their goods. Translated from bureaucratic into plain language: producers and sellers have already raised prices — a direct result of officials’ efforts at tax reform. And the president… canceled those efforts yesterday. So how is the government supposed to bring prices back down now? The answer: it won’t. Because in our country, once prices go up, they never come down,

 the lawyer wrote.

In short, the economic consequences of the reform have already been set in motion, and even if specific provisions are revised, reversing the price increases will be impossible.

A Struggle for Influence

Meanwhile, a new struggle has emerged among experts — for influence and recognition.

Financial analyst Andrey Chebotarev wrote on his Telegram channel @FINANCEkaz that a fierce competition has begun over who can claim credit for shaping the reform.

First of all, a real fight has broken out in Kazakhstan over who managed to influence the tax reform and push for liberalization. Associations of all kinds and ranks are jumping in, each thumping their chests online, claiming it was their stance that helped defend some small freedoms for business. It’s simple: first come, first served — and whoever has the biggest audience and ad budget gets the glory!

He added that in today’s climate, public perception matters as much as legal changes. Whoever convinces the public that their position ‘saved’ businesses will win the information war.

Chebotarev also noted that officials and experts often rely on familiar scare tactics — particularly the exchange rate.

If there’s no move — bluff; if you’re asked to cancel something, scare them with the exchange rate. It’s a universal trick — after all, the exchange rate is the most easily understood economic indicator, the one the common people watch... To stop people from seeing liberalization as abolishing the Tax Code, they scare them by saying lower taxes will weaken the currency. What’s the connection? Don’t ask. But the exchange rate scare tactic always works like a charm! the expert says.

“Good Tsar, Bad Boyars"

Lawyer Yerzhan Yessimkhanov notes that the president’s hands-on intervention is a symptom of a chronic governance problem — when mistakes are first made and then “fixed from above.”

This whole ‘Good Tsar, bad Boyars’ situation isn’t new for us. Officials make decisions, then the president steps in, and everything seems to get resolved in favor of the people. Personally, I’ve always believed that this kind of governance only causes harm. If something needs to be done, it should be done properly from the start — or not done at all.

This model, he adds, undermines trust in institutions: businesses don’t trust officials, officials are afraid to make decisions without looking to Aqorda for approval, and the president is forced to act as an arbiter in every contentious situation.

The Cost

According to estimates from the Ministry of National Economy, the tax reform could lead to the closure of up to 300,000 companies. Authorities call it a “natural market cleansing,” but for entrepreneurs, it sounds more like a death sentence.

Small businesses — already squeezed by inflation — risk becoming invisible taxpayers: formally existing, yet effectively deprived of any incentive to grow.

Yessimkhanov delivers a sharp summary of the situation: the reform was discussed for too long and ultimately turned into a bureaucratic imitation.

We’ve been discussing the tax reform since January. For ten months, the government, businesses, and experts have been negotiating. Officials have spent hundreds, if not thousands, of man-hours just coordinating the final list of activities… and the list remained the same. That money was wasted, and we’re the ones who paid for it. Maybe this time, we should actually listen to one of those so-called ‘hype bloggers’? At least then we wouldn’t have to redo everything again later. As the old saying goes: what’s been redone is never done well,  the lawyer concludes.

Original Author: Dinara Bekbolayeva