Deputy Berik Beisengaliev believes that the current budget crisis in Kazakhstan has been building up over the years and has deep, systemic causes, reports a correspondent from the Kapital.kz business information center.
“We often hear that it is time to make difficult and bold decisions. I think many would agree with this. But what we see is the government proposing to simultaneously raise VAT and lower the threshold for its payment. In this case, without any offset, VAT could become a turnover tax, and the entire amount will be included in the price of goods, creating an additional financial burden for the end consumer. There is also a high likelihood that businesses will become even more fragmented and go underground,” he noted in a parliamentary inquiry addressed to Prime Minister Olzhas Bektenov.
He suggested maximizing the balance between the budget's expenditure and income, optimizing all ineffective expenses; starting a real “whitening” of the shadow economy, which, according to various estimates, accounts for about a third of GDP, with a gradual transition of shadow business entities into the ranks of taxpayers; and revising approaches to supporting the real sector of the economy.
Berik Beisengaliev emphasized that the state should invest only in those enterprises that create real jobs and produce goods with high added value.
“I would like to specifically address the government's initiative to raise VAT rates. First. We believe that the government needs to approach this issue comprehensively, studying other approaches and proposals. Second. For example, the discussed draft of the new Tax Code includes benefits, the appropriateness of which needs to be reconsidered in light of the current challenges in the country's budget,” he said.
Third, according to the deputy, maintaining the retail tax regime while lowering the VAT registration threshold from 78 million tenge to 15 million tenge requires further discussion. The fourth measure is to improve tax administration.
“All of this will create a multiplicative effect for replenishing the budget. In other words, businesses should pay as much in taxes as they can without harming themselves, rather than as much as the government believes is necessary to replenish the budget,” he stated.
It should be noted that during an extended government meeting with the participation of the president on January 28, Deputy Prime Minister and Minister of National Economy Serik Jumangarin proposed to lower the VAT threshold to 15 million tenge. Prime Minister Olzhas Bektenov stated the need to raise the VAT rate while reducing the social tax and mandatory pension contributions from employers during the meeting.
“The main tax burden falls on the wage fund, and thus on the cost price. Even before the product hits the shelf, the entrepreneur is already forced to pay a large portion of taxes. The government proposes to reduce the burden on the wage fund by shifting it to sales. For this, it is necessary to raise the VAT rate while simultaneously lowering the social tax and mandatory pension contributions from the employer,” said Olzhas Bektenov.
Today, Kazakhstan is considering raising the VAT rate from 12% to 20%.
In early February 2025, Serik Jumangarin mentioned that the possibility of VAT benefits for certain enterprises is being discussed. For example, there may be no VAT for the agricultural sector. For food producers, three options are being discussed: maintaining the rate at 12%, reducing it to 5%, or exempting from VAT. For the pharmaceutical sector, VAT may also be reduced to 5%. In the housing construction sector, it is proposed to replace VAT with an infrastructure fee.