Small businesses still urgently require support and a springboard for further development, writes finprom.kz.
On January 28, President Kassym-Jomart Tokayev held an extended government meeting. Among other topics, the tax reform awaiting Kazakhstan was discussed. Specifically, according to Prime Minister Olzhas Bektanov and Minister of National Economy Serik Jumangarin, there are plans to raise the VAT rate while simultaneously reducing the social tax and mandatory pension contributions from employers.
The VAT rate has yet to be determined, with a reference point being the globally "popular" 20%. Differentiated rates may be possible for agricultural enterprises, the medical sector, pharmaceuticals, etc., but specific figures are not yet available, only estimates.
Additionally, it is proposed to lower the VAT registration threshold from 78 million to 15 million tenge and to reduce the number of OKED codes for retail tax (this refers to a special tax regime, SNR). Authorities believe this will expand the taxpayer base by 300,000 entities and generate an additional 5 trillion tenge annually.
Since the latest proposals directly affect small businesses, for whose simplification and stimulation the same SNR was introduced, analysts from the publication examined the activity indicators with which small businesses closed the year 2024.
It is worth noting that at the beginning of the current year, 536.2 thousand companies were registered in Kazakhstan, of which 98.2% (or 526.8 thousand) were small businesses. However, only 426.1 thousand companies were active, with small businesses accounting for 416.8 thousand. Thus, the share of active small businesses out of all registered in Kazakhstan was only 79.1% (up slightly from 79.7% the previous year).
Now let's discuss some less positive data. Out of the total number of active small companies, only 51.1% were considered active, which amounts to just 212.8 thousand. An additional 12% of the total number of active companies (or 50 thousand) were new small businesses that had not yet begun active operations.
At the same time, 37% (or 154 thousand) of small companies were classified as temporarily inactive. Notably, such high inactivity rates in small businesses have been observed since 2020, with peak negative figures recorded in 2023.
"It can be summarized that at the beginning of the year, only 212.8 thousand small companies were actively operating in the country — just over half of all active enterprises and only 40.4% of all registered ones. In comparison, among large companies, the share of active businesses was 96.8% of active enterprises and 95.6% of all registered ones. This is what stability looks like, but the small business segment in Kazakhstan is still lacking in this regard. Overall, it appears that small businesses still urgently need support and a springboard for further development... We will continue to monitor how the reform of the budget and tax system will affect small businesses, what solutions and support measures will be proposed in this situation, and which key points will be taken into account," emphasized the analysts.
It is worth mentioning that Maxim Barychev, the founder of the "Uchet" Group of Companies, believes that the introduction of a 20% VAT will lead to price increases and negate the effect of reduced payroll taxes.
BCC Invest stated that the increase in VAT will inevitably raise final prices for consumers, which will intensify inflationary pressure.
AERC CEO Zhanibek Aigazin believes that there are reserves for improving VAT administration, but this requires significant resources, while raising the tax rate to 20% is a simpler task.