Dear Readers,
The Ministry of National Economy published a Consultative Document on Regulatory Policy for the Draft New Tax Code for public discussion. The document outlines the main issues of the tax legislation, proposed solutions, and the potential impact of the reforms on the economy and social sphere.
The document identifies the following problems of the current tax legislation and possible ways to address them.
Tax / Topic |
Issues |
Proposed Solutions |
Corporate Income Tax |
Low flat corporate income tax rate and lack of differentiation by industry |
Link tax rates to economic sectors and grant regions the right to reduce the rate |
Value Added Tax |
Low VAT rate compared to other countries and low collection levels of this tax |
Maintain the tax rate at 12% and eliminate tax exemptions that negatively impact the state budget |
Personal Income Tax |
Flat individual income tax rate for all levels of income |
Introduce a progressive tax scale to reduce the tax burden on individuals with low income |
Excise Taxes |
The need to harmonize excise rates on tobacco products within the EAU framework |
Gradual increase in excise taxes on tobacco products in accordance with the EAU Agreement |
Small and Medium Size Business |
Excessive variety of special tax regimes with different conditions and criteria, which complicates their application and tax administration |
Abolish rarely applied special tax regimes, merge regimes with similar conditions, and review application criteria based on real practice |
Vehicle Tax |
Possible significant increase in individuals’ expenses for using cars due to the planned transition to a unified market for petroleum products within the EAU states |
Abolish the vehicle tax, except for cars with large engine capacities |
Property Tax and Land Tax |
Misalignment between the tax base, determined by the tax authorities for calculating property tax and land tax, and the market value of the real estate objects |
Change the procedure for determining the tax base to align it to the market value of the objects |
Luxury Taxation |
Absence of taxation of luxury items |
Introduce a luxury tax |
Tax Incentives |
Inconsistent approach to granting tax incentives |
Introduce a comprehensive approach for granting and monitor the effectiveness of tax incentives |
Tax Administration |
The need for further optimization of the interaction between the tax authorities and taxpayers |
Further development of IT technologies in tax administration |
International Taxation |
Emergence of contentious issues in international taxation due to the ambiguity in interpreting certain provisions of tax legislation |
Clarify concepts of tax legislation that lead to ambiguous interpretations |
Universal Filing Obligations of Individual Incomes |
Need to revise the approach to universal filing, due to increasing digitization and significant simplification of tax control of individual incomes |
Limit the commitments to submit an annual income tax declaration only to state officials and individuals having income not taxed at the source of payment in Kazakhstan (from 1 January 2025) |
The document is open for public discussion until 29 September 2023. Readers may submit comments and suggestions on the e-government portal.