Kazakh lawmakers are pushing for a differentiated tax policy on medicines and healthcare services to maintain their affordability amid upcoming tax reforms. Askhat Aimagambetov, a deputy of the Mazhilis (Kazakhstan’s lower house of parliament), has proposed exempting certain essential medicines from value-added tax (VAT) and reducing the tax burden on medical institutions.
Proposed VAT Adjustments
Kazakhstan is currently debating a new Tax Code that would increase the VAT rate from 12% to 16%, while introducing zero and reduced rates for specific industries. Aimagambetov, writing on social media, noted that a group of Mazhilis deputies had repeatedly advocated for differentiated taxation of medicines and medical services even before discussions on the VAT hike began.
He stressed that applying the full 16% VAT rate to all medical services and pharmaceuticals would lead to a sharp rise in costs and reduce access to healthcare for the population.
Tax Exemptions for Essential Medicines
To mitigate this impact, lawmakers propose VAT exemptions for drugs treating socially significant diseases such as:
- Cancer
- Rare diseases
- Palliative care
- Diabetes
- Autoimmune diseases
“The specific list is still under discussion and will be expanded,” Aimagambetov stated. “This measure will prevent a sharp increase in drug prices for those who need them most, socially vulnerable groups.”
For other medicines, a reduced VAT rate of 10% is under consideration.
Impact on Medical Services
Currently, medical services in Kazakhstan are not subject to VAT. However, under the new Tax Code, the government proposes introducing a 10% VAT rate. Aimagambetov and his colleagues initially suggested reducing this to 5%, but discussions are now focused on exempting certain socially significant medical services from VAT entirely. These include:
- Oncology treatments
- Palliative care (hospices)
- Stroke treatment
- Potentially obstetrics and other critical medical services
For other medical services, a 10% VAT rate may be introduced.
Changes to Corporate Tax in Healthcare
In addition to VAT adjustments, the government plans to raise the corporate income tax for medical institutions. Currently, this sector benefits from a zero-tax rate, but under the proposed reforms, a 10% corporate tax would be applied.
Consultations with Businesses Ongoing
As previously reported by The Times of Central Asia, the government plans to finalize the list of industries eligible for the 10% VAT rate following consultations with the business community.
