Prime Minister Olzhas Bektenov discussed tax reform issues with experts and business representatives, primeminister.kz reports.
Head of the Government noted that within the framework of implementation of the Head of State's instruction the proposed measures are actively discussed with the general public, especially with business and experts. Working groups headed by Deputy Ministers of National Economy and Finance have met with entrepreneurs from almost all regions, collected proposals for analysis and processing.
The Ministry of National Economy summarised the main approaches of the fiscal reform. Differentiated VAT and lowering the threshold for registration will reduce the dependence on the National Fund and channel additional funds for infrastructure development. In addition, it is proposed to reduce the number of special tax regimes from 364 types of activities to 40. It is noted that today the level of revenues in Kazakhstan is about 18%, it is a share of GDP on revenues. If we compare with other countries, in Russia this indicator is at the level of 42%, in developed countries - more than 50%. Thus, there is a shortfall of significant budgetary resources to finance state programmes. In the absence of reforms, according to the MNE RK, the National Fund at the current dynamics of its use by 2035-2036 years will be depleted to a minimum.
A lot of questions arise on administration. We are not standing here either, we are working. There are certain successes. On the revenue side of the budget, we are also actively working. In January, we reached 136% of the revenue plan. These are all the results of work and digitalisation in the sphere of state revenues," Olzhas Bektenov stressed.
The government is working on the creation of a unified digital ecosystem, which will improve efficiency and simplify the interaction between business and the state. Artificial intelligence and automated data analysis are being introduced, which will reduce the administrative burden and increase transparency. Big data processing technologies are being actively introduced to improve the efficiency of tax administration.
The participants of the meeting were introduced to the big data analysis system of the Ministry of Finance, where 55 state databases have been uploaded, by the end of the year their number will increase to 100. Digital profiles of taxpayers are formed on the basis of this information. Currently, 569,000 profiles of legal entities and more than 1.8 million profiles of individual entrepreneurs have been created. Digitalisation makes it possible to obtain complete data on the taxpayer, including payroll, number of temporary workers, objects of taxation, information on real estate, cars and other data.
The leadership of the Ministry of Finance presented specific projects of the State Revenue Committee, with emphasis on the implemented digital solutions and their effectiveness. Thus, the work on biometric identification of high-risk taxpayers in the system of electronic invoices (SEI) is underway. Today, 101 online trading platforms, including Temu, Pinduoduo and Alibaba Group, have been put on the tax register. They have paid 75 billion tenge of VAT or taxes on foreign companies engaged in electronic trading of goods and providing services electronically to individuals in Kazakhstan.
As part of the tax reform, it is proposed to strengthen control over the registration of LLPs and sole proprietorships to exclude fictitious transactions. Measures to identify entrepreneurs through Face ID are being considered. In addition, information will be checked to minimise the risks of registration on false persons. In 2024, more than 2.1 thousand such companies have already been identified. Another initiative is a ban on the registration of new companies in cases where the founder already has an inactive company, has tax debts or has committed serious tax violations.
A separate instrument of work on digitisation of the financial sphere is cash registers. In 2024, 39% of cash registers (453,000 units) did not punch cheques. A number of measures are being worked out in this direction.
An important step in tax administration, taking into account the growing number of citizens working on various Internet platforms, was the regulation of platform employment.
For example, within the framework of the pilot project of tax administration on tax administration on platform employment Yandex Taxi since September 2024 has transferred IPN for drivers in the amount of 378 million tenge and about a billion tenge of social payments. 50 thousand taxi drivers are registered as sole proprietorships. Thus, taxes are paid directly to the budget without being burdened with additional procedural issues. By the end of the first quarter of this year, the Ministry of Finance plans to expand the project to more than 30 platforms.
During the meeting, experts actively expressed their opinions on the current draft of the proposed reforms.
Bolat Zhamishev, ex-chairman of Kazakhstan Khalkyna public social fund, candidate of economic sciences, spoke in favour of lowering the VAT accounting rate of 15 million.
I think that the lower bar of 15 million should be definitely kept. Certainly, there will be pressure to raise this bar. I think that's a red line because there will start to be business fragmentation. There are more incentives for fragmentation when tax rates rise," Bolat Zhamishev said.
At the same time, he noted that businesses may have difficulties with the administration of accounting services. In this regard, it was proposed to further consider approaches to violations that may be when introducing reforms due to unfamiliarity with the process.
Independent Director, member of the Board of Directors of SPK Almaty JSC Abay Sarkulov noted that in order to reduce the budget deficit it is proposed to abandon withdrawals from the National Fund in favour of reforms.
Within the current tax legislation I would like to note a plus. Taxes are collected very professionally. This is thanks to digitalisation. The second big plus is that there are effective measures to collect debts to the budget. As for the reform itself, the task is clear: there is a budget deficit, and social expenditures are growing every year. In the regions, 80% of budgets are socially oriented, 15-20 per cent are spent on development, which is quite low, and there are also obligations to service foreign debts. It is extremely necessary to reduce the budget deficit, it should be realised in a comprehensive way," Abai Sarkulov said.
The expert voiced a number of proposals on the implementation of the fiscal function of the customs service, strengthening the work of national companies to attract foreign investment, the development of geological exploration, improving work in public procurement and others.
The head of the Association of legal entities ‘Union of Manufacturers of Ventilation Equipment of Kazakhstan’ Marat Bakkulov dwelled in his speech on the administration of the work of business from the leadership of the subject itself.
No businessman will not say that he is "in favour" of raising taxes, it is understandable. But those who work in ‘white’ and transparently - we - say that everyone should pay taxes. That is, there should not be separate categories, for which taxes are reduced, because it will always go into a ‘grey’ scheme," Marat Bakkulov said.
The trend of deliberate transfer to the grey and the system of wages was voiced.
Chairman of the Supervisory Board of Holding Company Kazfoodproducts LLP Yerik Balapanov supported the idea of the Government to introduce a zero rate for the agro-industrial complex. This, he said, will increase the competitiveness and availability of Kazakh agricultural products in the market.
Yerlan Ospanov, owner of Karaganda's Sary-Arka International Airport, said that non-payment of taxes is a crime in developed countries. Therefore, business fragmentation should be accompanied by public censure. At the same time, the expert stressed the paramount importance of digitalisation of tax administration and gradual reduction of inspections as a tool to ensure compliance with the legality of business. In turn, entrepreneurs should work in good faith.
On the issue of VAT, the businessman stressed that when an entrepreneur operating in the VAT system works in a chain with grey or black entities, difficulties are created for bona fide companies. As a result of the reform, the burden is expected to be proportionate and lifted.
Daniyar Kuanshaliyev, co-founder of KS Partners and macroeconomics expert at ERG, agreed with the Government's approach to raising taxes, but suggested considering the smooth implementation of the manoeuvre.
Abzal Sagymbaev, founder of DAMU DEVELOPMENT GROUP LLP, shared his vision of how the reform will affect the construction market. On this issue it was decided to hold a separate meeting through the Ministry of National Economy of the Republic of Kazakhstan.
Chairman of the Board of the Economic Research Institute Assel Sarsenbaeva reported on the need to eliminate imbalances in the economy, including tax reform. The current proposal of the Government does not imply a mechanical increase in VAT, it is about fair distribution of the tax burden. From a macroeconomic point of view, it is about eliminating the imbalance between monetary and fiscal policies, which in the medium term could lead to lower inflation.
Sholpan Aitenova, co-founder and executive director of the Zertteu Research Institute, a non-profit organisation, dwelt on the issues of regulating not only the revenue but also the expenditure side and increasing its efficiency. In particular, it was proposed to reduce the organisations whose functions can be replaced by digital solutions.
In turn, the chairman of the board of the analytical centre of the NAC Analytica (NU) foundation Rasul Rysmambetov noted that the key direction of replenishing the state budget is to strengthen control over the illegal movement of goods and the elimination of shadow schemes in the economy. In addition, an effective mechanism to ensure tax discipline can be an effective public coverage of cases of abuse of business splitting schemes to minimise tax liabilities. The Ministry of Finance has been instructed to work out this issue in detail.
Relevant comments were given on all the issues voiced by the experts.
Deputy Minister - Minister of National Economy Serik Zhumangarin noted that 80% of entrepreneurs with income up to 15 million tenge fall under the category of micro and small businesses. For comparison, in Russia this threshold is 10m tenge, in Uzbekistan it is 30m, and in Kyrgyzstan it is also about 30m. In Kazakhstan, businesses with incomes from 39m to 78m tenge often use a fragmentation scheme, registering 20-30 companies to stay in a more favourable tax category. For example, such a picture is observed in the construction industry. Thus, large and medium-sized businesses, evading taxes, go to the small and medium segment. Eventually, the number of entrepreneurs grows, but it does not increase the contribution of business to GDP.
Commenting on the voiced proposals, the Prime Minister said that the issue of reducing expenditures is also an important direction. The government is currently working out a package of decisions on the reduction of duplicating and other non-priority functions. These decisions will also be announced to the public. At the same time, the permissible amount of spending cuts will not cover the existing imbalance in the budget, and will not make it possible to solve the problems with the worn-out infrastructure and realise the goals of developing a sustainable economy.
Summarising the discussion, Olzhas Bektenov stressed the importance of fair distribution of the tax burden. Now businesses that evade taxes gain unfair competitive advantages, which requires putting things in order.
Most speakers spoke about the principles of fairness and that everyone should pay taxes. Those who don't pay taxes, they are just competing unfairly. That's understandable. He puts himself in a more privileged position compared to law-abiding companies. And we must focus on honest business, on those who pay taxes. We see them today. We support them," Olzhas Bektenov said.
It was noted that it is necessary to move to a civilised market, where the state, business and society interact on transparent terms. In fact, we are talking about a new social contract. We are talking about creating a fair system in which everyone fulfils their obligations. The state fulfils its social and economic obligations, and business fulfils its tax obligations. This is the system the Government is striving for by proposing initiatives to the Tax Code.
Tax revenues are a key source of funding for state support, infrastructure modernisation and the country's defence capability. Of particular importance now is the further development of transport and logistics potential, road construction, modernisation of energy and housing and utilities, as well as investments in defence.
At the same time, Olzhas Bektenov noted that today many key facilities and infrastructure are operating at the limits of their capabilities. For example, due to the growth of cargo traffic from China, the railway network is operating at the limit of its capacity. For further expansion requires significant funds.
It is necessary to develop transport infrastructure, including the construction of roads and railways, given the active expansion of transit opportunities from China to Europe, the so-called Middle Corridor. At present, the construction of Dostyk - Moyinty and Bakhty - Ayagoz sections is underway, which will increase throughput capacity.
In turn, the chairman of the Presidium of the Atameken NCE Raimbek Batalov proposed to continue work on improving the efficiency of tax administration step by step, by blocks of the economy.
Prime Minister Olzhas Bektenov thanked the participants of the meeting for constructive proposals and desire to contribute to the further development of the country.
The discussion on tax reform continues with the participation of business representatives.
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