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Kazakhstan’s Mining Association Proposes Reforming Mineral Extraction Tax

Aibar Dautov, head of Kazakhstan's Mining Industry Association, has called for reforms to the procedure for calculating the mineral extraction tax (MET) to boost budget revenues from oil and solid minerals. Speaking at the Astana Open Dialogue during discussions on the new tax code, Dautov noted that Kazakhstan currently employs ten different MET rates for crude oil taxation. These rates are determined based on two key factors: the price of oil at the time of sale and the annual production volume at a given field. The current tax structure is divided into the following production thresholds: 5% tax for annual production up to 250,000 tons 7% for 500,000 tons 8% for 1 million tons 9% for 2 million tons 10% for 3 million tons 11% for 4 million tons 12% for 5 million tons 13% for 7 million tons 15% for production up to 10 million tons 18% for production exceeding 10 million tons Dautov criticized this system as unfair to other sectors of the economy. “We believe the criterion of annual production volume should not exist at all. This differentiation has been in place for many years, but for some reason, it hasn’t been removed or acknowledged as a tax benefit. The Ministry of National Economy continues to support its inclusion in the new Tax Code. It’s unclear why this grading still exists—it should be eliminated and considered a relic,” Dautov stated. The complexity is even greater for solid minerals, according to Dautov, as their MET calculation currently involves 38 different tax rates for various types of minerals. The Times of Central Asia previously reported that Kazakhstan's Ministry of Industry and Construction has proposed replacing the current MET system with royalties. Under this system, taxes would be calculated based on the volume of sold products rather than the volume extracted. This change is scheduled to take effect on January 1, 2026, under new subsoil use contracts, while existing contracts will remain taxed under the current rates.

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World Bank Report Highlights Poverty and Inequality Challenges in Kazakhstan

The World Bank has released its Kazakhstan Poverty and Equity Assessment 2024, urging policymakers to adopt pro-poor fiscal policies, improve education quality, and enhance climate resilience to address poverty and inequality in the country. According to the report, Kazakhstan’s poverty reduction has slowed in recent years despite significant progress since the early 2000s. “Between 2006 and 2021, economic advancement significantly improved living standards and reduced poverty rates in Kazakhstan. However, economic growth has slowed since 2014, and the pace of poverty reduction has fallen. The COVID-19 pandemic exacerbated these challenges, highlighting the need for resilient and inclusive economic strategies presented in this report,” said Andrei Mikhnev, World Bank Country Manager for Kazakhstan. Kazakhstan’s economy has grown exponentially since 2006, with an average annual growth rate of 4.7 percent. This growth helped lift 5.9 million people out of poverty, reducing the poverty rate from 49.5 percent to 8.5 percent. However, the report identifies three phases of Kazakhstan’s poverty reduction journey: 2006-2013: Rapid poverty decline driven by strong economic growth. 2014-2016: Reversal during the economic downturn, raising poverty rates. 2016-2021: Resumed poverty reduction but at a slower pace The report highlights that Kazakhstan’s middle-class households with a low probability of falling into poverty grew 2.5 times, reaching 67 percent of the population in 2021 compared to 26 percent in 2006. However, this expansion has stagnated since 2013 due to slower structural transformation and productivity growth. Income inequality has also increased. The Gini index, a measure of inequality (0 = perfect equality, 100 = extreme inequality), rose from 24.3 in 2015 to 26.4 in 2021, driven by faster income growth among high-income households. Although fiscal policies, such as taxation and social spending, have mitigated some inequality, the report recommends making fiscal measures more progressive and pro-poor to maximize their redistributive impact. Poverty rates in rural areas (11.4 percent) remain significantly higher than in urban centers (6.6 percent). The southern Turkistan region now accounts for a disproportionate share of the poor population. Alarmingly, poverty has become more concentrated among children and large families, with children comprising 40 percent of the poor in 2021, up from 27 percent in 2006. The report underscores the critical role of human capital investment in achieving long-term poverty reduction and growth. While access to education in Kazakhstan is nearly universal, significant disparities in quality and outcomes persist. The Human Capital Index indicates that children in Kazakhstan achieve only 53–64 percent of their productivity potential, with regional and socio-economic inequalities exacerbating the issue. Climate-related shocks present additional risks, particularly for rural and vulnerable populations. The report calls for targeted investments in infrastructure and social transfers to build resilience against these challenges. To reduce poverty and inequality, the report suggests: Enhancing fiscal policies through progressive taxation and better-targeted social transfers. Improving education quality and outcomes, particularly for disadvantaged groups. Building resilience to climate shocks by investing in infrastructure and providing targeted support to low-income households. The report concludes that sustained policy reforms will be essential for Kazakhstan to maintain economic progress,...

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Marked by Tragedy: Why Kazakhstan’s Independence Day Is a Day of Reflection

On December 16, Kazakhstan marks Independence Day, commemorating the adoption of the Law on Independence and State Sovereignty of the Republic of Kazakhstan in 1991. Until 2022, the country observed this holiday over two days - December 16 and 17 - but recent legislative changes have reduced the celebration to a single day. The amendments to the Law on Holidays in the Republic of Kazakhstan, adopted in September 2022, redefined the country’s official holidays. Republic Day on October 25 regained its national holiday status, while December 1 - Day of the First President - was removed as a public holiday. Independence Day, while still classified as a state holiday, was given a more somber tone, with official emphasis placed on honoring the sacrifices that paved the way to sovereignty. [caption id="attachment_26631" align="aligncenter" width="1204"] @TCA, Askar KubaizhanovIndependence monument[/caption] From Republic Day to Independence Day The roots of Republic Day lie in Kazakhstan’s Declaration of State Sovereignty, adopted on October 25, 1990, as the Soviet Union was nearing its collapse. The declaration symbolized Kazakhstan’s first step toward independence. However, following the country’s full independence in 1991, December 16 became the primary national holiday. Republic Day lost its significance in 2009 but was reinstated as a national holiday in 2022. President Kassym-Jomart Tokayev, in his proposal to restore Republic Day, emphasized its role as the foundation of Kazakhstan’s independence journey. He suggested that Independence Day, while significant, should serve as a time for mourning and remembrance to honor those who contributed to the country’s sovereignty. [caption id="attachment_26632" align="aligncenter" width="1600"] @TCA, Askar Kubaizhanov[/caption] The Legacy of December 1986: Zheltoksan Protests December 16 carries weighty historical significance for Kazakhstan. On this day in 1986, protests erupted in Alma-Ata (now Almaty) after Moscow appointed Gennady Kolbin - a Soviet official with no prior ties to Kazakhstan - as head of the Kazakh SSR. Young Kazakh protesters demanded the application of the Korenization principle, which advocated for local leadership in Soviet republics. The protests, often viewed as a precursor to Kazakhstan’s independence movement, were violently suppressed by Soviet authorities. The operation reportedly codenamed “Blizzard,” was designed to provoke unrest and then crush it through bloodshed. Controversially, Nursultan Nazarbayev, who would later become Kazakhstan’s first president, was aligned with Soviet power at the time. In his memoir "Without Right and Left, "Nazarbayev claimed he led one of the protest columns during the demonstrations. For many Kazakh citizens, particularly those who participated in or were affected by the events, December 16-17 remain days of mourning. Almaty’s Peace Street was renamed Zheltoksan Street to honor the memory of the victims. December 2011: The Zhanaozen Tragedy The somber tone surrounding Independence Day was reinforced by the events of December 16, 2011, in Zhanaozen. For months prior, oil workers in the Mangystau region had been on strike, demanding better wages. The protests escalated when workers occupied the city’s central square. On Independence Day, clashes broke out between protesters and local officials during holiday celebrations. The situation turned violent when a group of...

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Kazakhstan Faces Doubling of Construction Industry Labor Shortage by 2030

Kazakhstan's construction sector is grappling with a significant labor shortage, with approximately 111,000 positions currently unfilled. Prime Minister Olzhas Bektenov warned at a recent government meeting that this figure is expected to double by 2030, forecasting a deficit of over 200,000 skilled workers in the industry. Bektenov highlighted that the most affected roles include plasterers, painters, welders, masons, and concrete workers - essential positions for the sector’s operations. While the construction industry ranks third among sectors facing workforce shortages, it holds a critical place in Kazakhstan’s economy. According to government forecasts, education leads in expected vacancies, with 331,000 unfilled positions projected by 2030, followed by trade at 228,000. Despite ranking behind these sectors in terms of unmet demand, construction contributes the most to Kazakhstan’s GDP among the three, accounting for 5.6% of the country’s total economic output, according to the Ministry of Industry and Construction. This looming shortage poses challenges to sustaining growth in a sector vital to the nation’s development and economic stability.

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Kazakhstan Building Five Cross-Border Trade Hubs

Kazakhstan is advancing plans to establish five cross-border trade and economic hubs, aiming to position the country as a key global transport and logistics center. The initiative was reviewed at a government meeting on December 10. Strategic Hub Development Minister of Trade and Integration Arman Shakkaliyev reported that significant progress has been made on the hubs, with rail and road links already in place. The planned hubs are: The Khorgos Hub: Located on the border with China. The Caspian Hub: Situated along the Trans-Caspian International Transport Route (TITR). The Eurasia Center for Cross-Border Trade: Positioned at the border with Russia. The “Central Asia” International Center for Industrial Cooperation: At the border with Uzbekistan. The Industrial Trade and Logistics Complex: At the border with Kyrgyzstan. Additionally, container hubs are planned for the ports of Aktau and Kuryk in the Mangistau region. Multimodal air hubs are also under development at airports in the cities of Astana, Almaty, Shymkent, and Aktobe. Broader Economic Goals Prime Minister Olzhas Bektenov underscored the strategic importance of these projects, emphasizing their potential to reduce transit times, boost industrial production, increase tax revenues, and create new jobs. Bektenov highlighted that the network of hubs will form a unified trade and transport space with Kazakhstan’s key trading partners. “This will significantly increase trade turnover between the countries and strengthen strategic relations with neighboring states,” he said. The prime minister also stressed the importance of leveraging major transport corridors such as the East-West, North-South, and Trans-Caspian International Transport Route corridors to enhance access to the markets of China, the Persian Gulf, the Caucasus, and Europe.

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High Food Costs and Growing Waistlines: Kazakhstan’s Struggle with Rising Obesity

More than half of Kazakhstan’s population is overweight or obese, even as food prices in the country continue to climb. Deputy Prime Minister Serik Jumangarin recently highlighted that nearly 50% of consumer spending is allocated to food and beverages. In response, members of the Senate and the upper house of parliament are advocating for stricter regulations on food quality. Aniko Nemeth, an expert on food safety and nutrition at the Food and Agriculture Organization’s (FAO) regional office for Europe and Central Asia, pointed out the country’s obesity crisis during a Senate hearing on food security. Drawing from data from the Kazakh Academy of Nutrition, she noted that 55.5% of women and 49.2% of men in Kazakhstan are overweight or obese. At the same time, 5.6% of the population suffers from malnutrition. The paradox highlights a larger issue: the rising cost of a healthy diet. According to Nemeth, the price has increased by at least 8% over the last eight years. Urban residents are more affected than rural residents who can supplement their diets with homegrown produce. Deputy Prime Minister Jumangarin acknowledged that food prices are a major burden for the population. He outlined measures to address the issue, including constructing 92 modern fruit and vegetable storage facilities by the end of next year. With a capacity of 700,000 tons, these facilities aim to stabilize seasonal prices. Additionally, subsidies for seeds will be increased to support farmers, focusing on reducing dependency on foreign hybrids. Jumangarin also addressed the dependence on imported meat, which drives up costs. He announced plans for a commercial livestock farming project in the Turkestan region, modeled on Australia’s practices. Expected to launch in 2025, the initiative aims to lower domestic meat prices and increase sausage production. Furthermore, Kazakhstan is set to become self-sufficient in poultry production and may even begin exporting chicken meat within a few years. Kazakhstan’s cheese production currently meets only 57% of domestic demand. New production projects are underway to bridge the gap, including partnerships with global leaders like French-owned Lactalis, the world's largest dairy products group. Jumangarin revealed plans for a facility in the Akmola region and another in Kostanay to produce 2,000 tons of cheese annually. These efforts coincide with an anticipated surplus in milk production from newly established dairy farms. Despite these efforts to make food more affordable, senators believe legislative action is needed to address the obesity epidemic. Arman Utegulov, representing the agricultural ministry of Kazakhstan, proposed a law to regulate genetically modified organisms (GMOs) and foods treated with pesticides and antibiotics. He also called for stricter oversight of laboratories and trade centers to ensure food quality. “Excessive hormones in animal feed lead to chronic diseases,” Karimovich warned. He suggested amendments to existing legislation and even the potential return of veterinary laboratories to state control to tackle these issues. Kazakhstan faces a dual challenge: ensuring food affordability and combating rising obesity rates. While government initiatives aim to support domestic agriculture and stabilize food prices, balancing quality and cost remains critical....