Prime Minister Olzhas Bektenov discussed tax reform with entrepreneurs from the North Kazakhstan region, as reported by primeminister.kz.
“Currently, it is essential to work on increasing the revenue part of the budget. In previous years, there has been a low level of development budget. The earlier decision to reduce tax rates and introduce numerous exemptions has led to a budget imbalance, where government expenditures significantly exceed revenues,” noted Olzhas Bektenov.
Possible scenarios for balancing the budget are limited. One option is to use funds from the National Fund to cover the deficit; however, this approach carries the risk of rapid depletion. An alternative path is to reduce social spending, which constitutes 60% of the state budget. However, Kazakhstan is a social state and will fulfill its obligations.
“The optimal option is to work on the revenue part of the budget: adjusting tax rates and revising tax regimes,” said Olzhas Bektenov, emphasizing that the government adheres to this approach. It is expected that the forthcoming changes will achieve budget balance and strengthen the country's economic stability.
The head of the government noted that the funds will be reinvested into the economy, directed towards supporting businesses and developing infrastructure. They will not be used to expand the state apparatus.
“Our task is to create conditions for sustainable business and economic growth. Additional budget revenues will be used to finance projects proposed by businesses themselves. Without modern infrastructure – energy sources, thermal and electrical networks – businesses cannot develop. Capacity constraints often become a barrier to implementing new projects,” explained Olzhas Bektenov.
Deputy Minister of National Economy Azamat Amrin shared details of the tax and budget reform with the meeting participants. In particular, he discussed the differentiated VAT rate: 16% – basic, 10% – for certain sectors, 0% – for agriculture, as well as the reform of several special tax regimes and the reduction of the VAT registration threshold.
1 Sergey Domaev, General Director of North Broiler LLP and Chairman of the Regional Council of the Chamber of Entrepreneurs of North Kazakhstan, addressed issues of tax regulation for agricultural enterprises.
“The main suppliers of production means are VAT payers. Exemption from VAT will have a positive effect only if this measure is applied throughout the chain – from the manufacturer to the end consumer – and should apply to the nomenclature group of goods, not to the business entity. It is essential to delve deeper into this issue,” said Sergey Domaev.
The Prime Minister instructed the Ministry of National Economy of the Republic of Kazakhstan to consider the proposal and take into account issues of tax administration for agricultural products as well as goods of the Special Economic Zone.
Almas Nurmagambetov, General Director of the S.M. Kirov Plant, proposed the establishment of an intermediate rate of 10% for domestic producers in the industrial sector.
In his comments, the Prime Minister emphasized that the draft of the new Tax Code already includes several measures aimed at stimulating the production of high value-added products. One of the key support instruments is the reduction of the corporate income tax (CIT) rate for manufacturing industries, including electronic and industrial products.
“The state sets the tone and prioritizes: enterprises engaged in deep processing and the development of new types of finished products will receive tax benefits. At the same time, the export of raw materials and the production of low-processed goods will be taxed at higher rates,” clarified Olzhas Bektenov.
2 Overall, the government is actively working on measures to support domestic producers.
“We have made significant progress in protecting domestic production in state procurement and procurement in the quasi-public sector. The list of goods that must be purchased exclusively from Kazakhstani producers has increased threefold,” reported the Prime Minister.
Furthermore, the state is implementing a system of offtake contracts, which ensure long-term orders for Kazakhstani enterprises. All national companies within the funds “Samruk-Kazyna,” “Baiterek,” and others are required to increase the share of purchases from domestic producers.
“This is an important measure of state support that will allow for the development of national production and strengthen the positions of Kazakhstani enterprises,” concluded the head of the government.
The Prime Minister clarified the issue of the 4% retail tax, which will continue to be in effect. For example, neighborhood stores will not be subject to the 16% VAT; they will continue to pay the retail tax. According to the Ministry of National Economy of the Republic of Kazakhstan, the basic B2C rate for retail tax is 4%. The retail regime should correspond to its name – sales only to the population.
“The retail tax remains as it was for retail, for any store, those examples you mentioned are sold in retail. No one will take away these benefits from you. There must be a clear understanding,” emphasized Olzhas Bektenov.
Dmitry Sharapaev, Director of Rainbow LLP, also voiced proposals regarding measures for tax differentiation. These include exemptions from tax for waste recycling enterprises, as well as a reduction in rates for secondary raw material processors. The Prime Minister instructed the Ministry of National Economy to work together with the relevant state organizations to examine the proposal in detail, as this sector in the country is developing slowly.
Meanwhile, individual entrepreneur in the light industry Alia Basheeva raised the topic of taxation of imported raw materials. An important issue regarding fake enterprises that sell goods purchased abroad under the guise of their own production was highlighted.
3 “I believe that light industry is vital for our country. If we buy everything abroad, it does not reflect well on us,” stated Alia Basheeva.
“Regarding fake producers – this is a serious problem in our country, where under the pretext of production, there is actually import: a label is glued that says ‘produced in Kazakhstan’ and they receive all the privileges as if it were a Kazakhstani product. We are currently working in this direction. The draft law is in parliament. I believe that with its adoption, we will significantly resolve this issue,” responded Olzhas Bektenov to the question.
This issue will also be further explored by the responsible ministries.
At the end of the meeting, the director of the partnership “Zenchenko and Co” Gennady Zenchenko spoke.
“As for taxation, we heard today. How many different undercurrents we have, how many of these neighborhood stores, individual entrepreneurs, and farms are trying by any means to evade taxes, we are well aware of this. But we already see that we have only just begun talking about the Tax Code, and prices have already started to rise. These are not just words, as they say, some are scared. But people are already preparing. They may be right because they understand that they will be held accountable for this. Therefore, we need to approach this promptly, with fewer discussions; specifics should be provided, the manager to the accountant: ‘Are we satisfied? We are satisfied. Work.’ Our region has always been at the forefront. Therefore, you can always count on us. With wisdom, we will do everything to ensure that our state is prosperous and our people are happy,” stated Gennady Zenchenko.
4 The moderator of the meeting, Chairman of the Presidium of the National Chamber of Entrepreneurs “Atameken” Raimbek Batalov, summarized the discussion.
“Business expressed its concerns and proposals. We see that almost all sectors, without exception, want a differentiated rate. This is evident from every business; therefore, it is indeed a challenging task. We need to approach this very carefully. We are currently conducting serious work with all regions within the framework of a working group - the National Chamber together with the ministries of economy and finance. We are not just collecting proposals, not just emotions; the most important thing is calculations. We are making these calculations with the Institute of Economics and the Ministry of Economy. I believe that in the last week or two, we will summarize everything,” said Raimbek Batalov.
The Prime Minister thanked all participants for the constructive dialogue.
“We are receiving a lot of proposals and options for solving various issues. All of them will be taken into account. We should go to parliament next week with our version of changes to the Tax Code, and further discussions will continue in the Mazhilis. I believe the business community will take the most active part there. It is in our interests, as the government, to ultimately adopt a well-considered, balanced decision that will not push anyone