Kazakhstan: Most Expect VAT Hike To Worsen Living Conditions — Survey

People are bracing for price increases, unemployment, and business closures, Orda.kz reports.

A DEMOSCOPE survey found that 61.4% of respondents believe the VAT increase will negatively impact their quality of life. Of these, 32.4% expect a major decline, while 29% expect a more moderate one. Only 9% anticipate improvement.

Nearly two-thirds expect price growth, 27.3% foresee a reduction in small and medium-sized businesses, and 26.5% predict rising unemployment.

Almost 20% expect the shadow economy to expand, while 18.2% believe budget revenues may increase.

The greatest concern is the pressure on businesses. Over 60% of respondents believe the VAT will worsen the situation for SMEs. Only 10% expect a positive effect. Among entrepreneurs, the proportion of dissatisfied individuals is even higher — 70.5%.

Respondents believe the changes will mostly benefit the state (63.8%) and wealthy citizens (27.9%), while the groups least likely to gain are businesses (10.2%), the middle class (3.3%), and low-income citizens (2%).

Trust remains low: 41.6% do not trust the government’s spending, and another 14.6% are doubtful. Only 12.7% fully trust how collected funds are used.

Public awareness is also limited — 47.5% had not heard about the new Tax Code, while only 17% were well informed.

Among entrepreneurs, awareness was much higher at nearly 70%.

In the summer, President Qasym-Jomart Toqayev signed the new Tax Code, raising the base VAT to 16%, introducing reduced rates of 10% and 5% for select sectors, and lowering the VAT registration threshold to 40 million tenge.

Officials promised simplification and reduced reporting, arguing that the reform is needed to stabilize the economy. 

Expert Andrey Chebotarev noted that VAT directly affects prices, and increases will be felt even with a 16% rate rather than 20%. He supported a differentiated system to support weaker sectors, adding that a lower VAT threshold expands taxation but creates difficulties for small businesses.

Original Author: Ruslan Loginov