Kazakhstan Plans Differentiated VAT Rates in Major Tax Reform

Finance Minister Madi Takiyev and Vice Minister of Economy Azamat Amrin presented tax reform proposals at a business meeting in Astana,  Orda.kz reports, citing the Cabinet of Ministers.

The discussion centered on implementing differentiated VAT rates, with over 150 representatives from various business sectors attending.

This was stated by Vice Minister of Economy Azamat Amrin at a meeting with business representatives in Astana.

We propose to consider the following mechanism: a generally established VAT rate of 16%, a complete exemption from VAT for agricultural producers, and for a number of industries - an intermediate rate of 10%. Thus, the differentiation of rates proposed by the government is: 16%, 10%, 0% and exemption, the Vice Minister said.

The proposal maintains the current VAT exemption for farms.

Legal entities currently paying 30% of taxes due will also become VAT-exempt under the new system.

The government is still consulting with businesses about which industries will qualify for the 10% rate.

The meeting also covered changes to simplified declarations, retail tax, and wage fund regulations.

The key change is the implementation of this regime only in the B2C segment (retail). It is proposed to remove restrictions on the number of employees. If the entrepreneur's sales income exceeds 100 million tenge per year, it is possible to reduce taxable income by the amount of the payroll. Thus, the threshold of 100 million tenge will stimulate the "whitening" of wages. At the same time, the 4% retail tax rate remains (with the possibility of a 50% reduction by maslikhats).

The government expects these reforms to generate an additional 4-5 trillion tenge annually in tax revenue.

This money would fund investment projects, development institutions, and infrastructure modernization while reducing reliance on the National Fund and lowering public debt.

President Qasym-Jomart Toqayev recently endorsed the concept of differentiated VAT rates during a meeting with Kazakhstan's business community, emphasizing the need to consider various economic sectors' specific characteristics.

Original Author: Raushan Korzhumbekova