How the increase in VAT will impact the wallets of Kazakhstani citizens: insights from neighboring countries.
Serious tax changes are being discussed in Kazakhstan: the VAT rate may increase from 12% to 20%, and the registration threshold for VAT will be lowered from 78 million to 15 million tenge. Additionally, there are plans to eliminate tax benefits. Businesses are concerned that such measures will not help fill the budget but instead worsen the financial situation. Inbusiness.kz decided to examine how the VAT rate in Kazakhstan compares to other countries to understand how this proposal aligns with global standards.
Deputy Prime Minister and Minister of National Economy Serik Jumangarin stated at a government meeting at the end of January that the reforms would bring an additional 6-7 trillion tenge to the budget annually. However, he noted that such measures would impact Kazakhstani citizens, and the authorities promised to support the population through targeted social assistance. Additionally, businesses were promised a reduction in labor taxes, which currently reach 40%.
Nevertheless, experts warn that this could lead to problems. For example, if 300-400 thousand new companies fall under VAT, the tax system may struggle to handle such a large number of new taxpayers. Tax security expert Dmitry Kazantsev also points out that Kazakhstan has been rewriting its Tax Code for several years, causing instability and deterring investors. It is unlikely that investors will want to invest in a country where tax policy is constantly changing.
"They want to attract a huge number of new companies that will pay VAT. But the accounting departments still cannot figure out how to operate under the simplified tax system, and now they will have to maintain full accounting. Will the tax system cope with desk audits and deduction checks? If 300-400 thousand new taxpayers fall under VAT, the system may simply collapse. Therefore, these proposals cannot be accepted in their current form," warns the expert.
The authorities often refer to the experiences of other countries, but it is important to consider that salaries and economic conditions in those countries are quite different. For instance, in Uzbekistan, the VAT rate is 12%, and it will remain so until 2028 due to a presidential decree. In Kyrgyzstan, VAT is also 12%, while in Russia, the VAT rate was increased to 20% in 2025.
Starting in 2025, Russia is raising its tax burden: the corporate profit tax has increased from 20% to 25%, and for small businesses under the simplified taxation system, limits are now in place: VAT of 20% is imposed on income exceeding 60 million rubles (11.5 million tenge), and income tax has become progressive—ranging from 13% to 22% depending on income levels.
Today, about 175 countries around the world impose value-added tax (VAT) on goods and services. Rates vary and depend on the economic situation of each country. When discussing the highest VAT rates in EU countries, according to the Tax Foundation website, Hungary (27%), Finland (25.5%), Croatia, Denmark, and Sweden (25% each) hold the leading positions.
Low VAT rates in EU countries are noted in Luxembourg—17%, followed by Malta (18%), Cyprus, Germany, and Romania (all at 19%). Among non-EU countries, the lowest VAT rate is observed in Switzerland—only 8.1%.
Of course, most European countries have high taxes. According to GfK, in 2024, the purchasing power of the average European increased by 3.9%, reaching 18,768 euros. However, this standard of living is not homogeneous and varies significantly across different parts of Europe. High incomes are noted among the residents of Liechtenstein, Switzerland, and Luxembourg, while the lowest indicators in Europe are seen in Portugal, Poland, the Czech Republic, and generally in Eastern European countries.
In European countries, the average salary is several times higher than in CIS countries. For example, according to the Trading Economics website, in Germany, locals earn an average of about 4,479 euros per month, in France—3,613 euros, in Spain—2,205 euros, and in Poland—1,916 euros. In the post-Soviet space, the average salary in Russia, converted to tenge, is about 440,000 tenge, in Uzbekistan—around 210,000 tenge, and in Kyrgyzstan—about 213,000 tenge. For comparison, in Kazakhstan, the average salary in 2024 is about 420,000 tenge.
Minister Jumangarin asserts that a VAT rate of 20% is standard for most countries worldwide. However, when comparing Kazakhstan to developed countries, one must consider whether the country is ready for such changes given its low salaries and purchasing power. Budget statistics unrelentingly indicate that there are few alternatives, with the only question being timing and the depletion of reserves. In any case, the transition period will be challenging, and the impact on the standard of living will be significant yet bearable. While the authorities promise support, it is crucial that changes take into account the opinions of not just businesses but also ordinary citizens.