The increase of the VAT rate from 12% to 16% and the reduction of the tax registration threshold to 15 million tenge will slow Kazakhstan's GDP growth by 42 basis points, stated Deputy Minister of National Economy Azamat Amrin, as reported by a correspondent from the Kapital.kz business information center.
"If our socio-economic development forecast for the next three years anticipates a GDP growth of 5.4%, the impact of the VAT increase will be minus 42 basis points," said Azamat Amrin during the presentation of amendments to the Tax Code in the Mazhilis.
This will occur due to changes in economic activity, he noted.
"We understand this, so we generally expect a decrease in GDP, but it will be short-term; then everything will stabilize," the deputy minister believes.
Additionally, the Ministry of National Economy expects that the VAT increase will lead to inflation rising by 2.5-3%.
"The additional inflation will be added to the inflation forecast currently included in our socio-economic development forecast - plus 2.5-3%. For reference, last year the inflation was 8.6%, and an additional 2.5% will be added. This means an expected inflation increase of around 12% in 2026. However, this inflation will be temporary and will stabilize within a year, restoring by 2027 and 2028. All our models have confirmed this," he concluded.
At the same time, Azamat Amrin assured that the current VAT rate in Kazakhstan is one of the lowest in the world. Lower rates are set in Japan and South Korea, where VAT collection rates are 72-73%, as well as in oil-producing Arab countries.
Earlier, the Republic of Kazakhstan considered raising the VAT rate from 12% to 20%, while intending to reduce the burden on the wage fund to 30%. Additionally, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin proposed lowering the VAT threshold to 15 million tenge. During a meeting with businessmen on January 28, 2025, President Kassym-Jomart Tokayev stated that any innovations should be based on a comprehensive analysis and a well-thought-out strategy, and he instructed the government to further explore the VAT rate issue.
On February 11, 2025, Serik Zhumangarin stated at a government meeting that the value-added tax rate "will be differentiated: 16%, 10%, 0%, and exemption from VAT." It was also reported that a social infrastructure payment (SIP) is planned to be introduced in the construction sector instead of VAT.
The proposed reform regarding the elimination of the social tax and OPVR payments by entrepreneurs could take place if the VAT was raised to 20%. In that case, the state would have revenues to cover social contributions instead of the employer. However, with the currently proposed VAT rate of 16%, social contributions are suggested to remain unchanged.
The Ministry of Finance of Kazakhstan is also considering issues related to the reduction of ineffective tax benefits and the differentiation of personal income tax based on the income of individuals.
It was also reported that a reduced income tax rate will be introduced for manufacturers of locally produced goods, while raw material processors will receive a VAT deferral on imported equipment.