Pensions, benefits, and Nazarbayev University: what new taxes will be introduced or abolished in the upcoming Tax Code?

At the annual conference of accountants, the head of the KGD MF RK methodology department, Zaure Isenova, who is part of the working group developing the Tax Code project, discussed the key changes in the document. The specialist emphasized the most pressing issues for accountants, such as corporate income tax (CIT), individual income tax (IIT), and value-added tax (VAT), as reported by inbusiness.kz.

It is worth noting that the new Tax Code is being developed to fulfill the directives of the head of state aimed at simplifying the tax system and reducing the burden on small businesses.

As Zaure Isenova pointed out, the main changes concern the sections on CIT and IIT, which have been completely revised. VAT, on the other hand, has remained largely unchanged, although some clarifications have been made.

Exemptions for Government Securities Removed

Regarding CIT, the changes have affected the structure of the code.

"We have restructured the divisions into paragraphs to eliminate existing questions and make it more understandable. The new code highlights five key features: subsoil use, the financial sector, digital tools and assets, long-term contracts, and others. Additionally, new types of income have been introduced. I want to emphasize that this does not mean the emergence of new taxable objects; rather, we have clarified and identified previously unmentioned incomes. Only one type of income has been excluded — that derived from the operation of facilities in the social sphere," noted the KGD representative.

Moreover, according to her, the formula for determining taxable income has been revised, which will allow for the legalization of losses and simplify their carryover. In the new version, a separate paragraph is dedicated to income from capital gains, which is now divided into four categories.

New types of deductions have emerged. Standard tax rates remain unchanged, and investment tax preferences are still in effect but have been expanded.

In the draft code, all expenses for research and development (R&D), whether incurred independently or through contracted work, will be identified with a single deduction for R&D. Leasing companies can now fully deduct their fees, and taxable income is reduced by 100% on the amount of the fee. The draft provides for a reduction of this figure to 50% per year.

Exemptions for government securities have been removed. Previously, all income and rewards from government securities, as well as income from the appreciation of securities, were adjusted. However, a year ago, restrictions were introduced on the application of these exemptions to government securities issued by the National Bank.

Now a rule has been introduced for all other government securities stating that from 2030, exemptions will no longer apply. However, the draft Tax Code provides for the postponement of this deadline from 2030 to 2026. Consequently, if the code is adopted, adjustments for government securities will not be applicable from 2026.

But there is good news: a new income category from capital gains on debt securities has been added, just like for equity securities.

The term "adjustment" will not be used in the new Tax Code. Adjustments will be provided in one place and will be similar to how it occurs with VAT when discounts are refunded, and so on. This means that the application of adjustments will be uniform for both CIT and VAT.

What Else Has Been Reviewed

There is also a provision for reducing taxable income based on expenses. All preferential norms for Nazarbayev University and autonomous educational organizations have been excluded – they are now equated with regular social sector organizations.

The developers of the new Tax Code have completely reviewed losses. They are now also categorized for convenience, as well as based on how they are carried over and compensated, in which period they arise, and so on.

When it comes to digital assets, a new article 227-1 was introduced a couple of years ago, which regulates the procedure for determining income. This category includes mining, and they define income based on the amount of distributed assets. However, the procedure was not outlined for those who do not engage in mining but possess digital assets. For such individuals, income from capital gains is provided.

Currently, if social sector organizations are exempt from taxes under article 290 of the code, provided they direct their income towards the same activity, this exemption may now be revoked with the changes.

According to the established conditions of article 290, organizations will only be exempt from taxes if certain requirements are met. There are active discussions about what interest rates to apply: some propose 5%, while others are discussing new conditions.

For individuals selling their own production goods in the processing sector, a 10% rate will be applied. Agricultural cooperatives will be taxed at a rate of 6%, while agricultural producers will be taxed at a rate of 3%.

VAT Exemption Will Only Apply to Medicines under OMS

Tax benefits have been retained for certain categories, including special economic zones (SEZ). This applies to all contractual relationships where the state, which commits to maintaining the SEZ status, is on one side, and investment agreements are on the other.

Today, the sale of medicines and medical devices is completely exempt from VAT according to article 394 of the code, in accordance with the list approved by the Ministry of Health. This list includes both known and unknown drugs and medical devices, meaning the exemption applies to everything. However, a limitation has now been introduced that the exemption will only apply within the framework of GOBMP and OMS.

As Zaure Isenova states, this issue is generating a lot of discussions in parliament and will be the subject of further debates.

Unified Approach

In practice, accountants know that not everyone applies for tax deductions: some are aware of such opportunities, while others are not. As a result, inconsistencies arise in the application of deductions.

A unified approach is planned to be implemented for everyone. Collecting documents will not be necessary, which should simplify life for tax agents and citizens. Accountants often complain about situations where individuals bring documents for applying tax deductions within the statute of limitations, creating additional difficulties. The new approach will be convenient for both individuals and tax agents.

Two additional tax deductions are provided: for social contributions and a social deduction. The social deduction will only be available for the following categories of citizens: persons with disabilities, veterans of the Great Patriotic War, adoptive parents, and guardians of children with disabilities.

Additionally, there is a discussion in parliament regarding the exemption of pension payments from taxation, which is supported by the majority. The question is whether this will be implemented before the introduction of the new code. In particular, it is planned to exempt one-time pension payments introduced in 2021 from taxation.