The list of retail tax payers by types of economic activity is set to be reduced in Kazakhstan. This was announced today during an extended government meeting with the participation of the head of state by the Deputy Prime Minister of the Republic of Kazakhstan, Serik Zhumangarin, as reported by a correspondent from the Kapital.kz business information center.
“The ceiling for growth in expenditures over the next 5 years has been calculated according to the budget rule. Why is growth in expenditures necessary? The government in all countries is one of the main investors in the economy. For example, the share of Kazakhstan's investments in GDP is 17.2%, and these investments must continuously increase. Additionally, this serves as a signal for other investors. If the government does not invest itself, it is natural that other investors will not invest either. However, we are currently facing certain issues,” he noted.
There is a significant difference between our own revenues and expenditures, which we cover through loans, as well as guaranteed and targeted transfers.
“At the same time, I want to point out that the budget deficit does not exceed the permissible limit and stands at 2.7% of GDP. The national debt currently amounts to 22.8% of GDP. All these indicators are within the established covenants. For instance, in neighboring countries, this figure is 30% and above,” emphasized Serik Zhumangarin.
According to him, under the Tax Code project, which is currently in the Mazhilis, it is planned to reduce the number of OKEDs for the retail tax, returning it to its essence.
“I want to clarify that the special tax regime based on the retail tax is convenient for businesses and will not undergo any changes. However, this regime includes various types of economic activities, some of which do not correspond to the retail sector. In other words, we have granted preferences to those who should not have been beneficiaries of the retail tax. Retail is the sale to consumers. Typically, this includes trade, hotels, catering, etc. However, in our case, almost the entire spectrum of business is covered – manufacturing, services, construction and installation work, among others. As a result, a significant number of businesses have ceased to be VAT payers. Therefore, we propose to reduce the number of OKEDs for the retail tax, restoring its essence,” he stated.
This will ensure a complete chain of VAT offsets from the importer to the consumer, reducing the average effective rate from 12% to about 4%. A credit side will emerge. This will create conditions for entrepreneurs and clarify mutual settlements.
“As part of the reform, an increase in the VAT rate is planned. We have conducted calculations using macroeconomic models from the National Bank. There is already a concrete vision. We will discuss this with experts. We emphasize that this is not just about a mechanical increase in the VAT rate, but rather a comprehensive set of measures aimed at improving the tax and budgetary system,” he clarified.