Kazakhstan’s draft Tax Code, set to take effect in 2026, proposes a differentiated corporate income tax (CIT) rate for banks, aiming to encourage business lending by making it more financially attractive than consumer lending or government securities investments.
The proposed changes were announced by Akylzhan Baimagambetov, Deputy Chairman of the National Bank of Kazakhstan, during a recent briefing. He explained that Kazakhstani banks currently derive income from three main sources:
- Government securities, whose earnings are currently tax-exempt.
- Consumer lending, taxed at 20% CIT.
- Business lending is also taxed at 20% CIT.
As banks tend to prioritize consumer lending over business loans, monetary authorities are now restructuring tax incentives to alter this trend.
“The proposed approach is as follows: investments in government securities will now be subject to corporate income tax while lending to businesses will be taxed at a lower rate – 20% CIT. Meanwhile, all other income, including government securities and consumer lending, will be taxed at 25% CIT,” said Baimagambetov.
Possible VAT Increase to 20%
Another major tax reform under discussion is an increase in value-added tax (VAT) from the current 12% to as high as 20%.
“We have not yet finalized the VAT rate, but the proposed range is 16% to 20%. Our calculations show that a higher VAT rate would increase the average burden on businesses by just 4%, but the end consumer will certainly feel the price hike. Inflation may rise by up to 4.5%, and we need to mitigate this impact,” said Deputy Prime Minister Serik Zhumangarin.
To counterbalance the inflationary effect, the government plans to expand targeted social assistance, adjust salaries in state institutions, and increase pensions.
In addition, if VAT is raised to 20%, the government intends to reduce payroll taxes by 10% by eliminating the social tax and mandatory employer pension contributions.
“If we are not permitted to reduce these expenses, we will not increase VAT significantly – it’s a matter of checks and balances. We plan to submit our VAT proposal to parliament in the second half of February,” Zhumangarin added.
Lower VAT Registration Threshold and Expected Revenue Boost
Another key tax reform under discussion is a reduction in the VAT registration threshold from 78.6 million tenge to 15 million tenge. The government expects this change to increase tax revenues by 5-7 trillion tenge.
In 2024, Kazakhstan’s national budget collected 12.3 trillion tenge in taxes.
As The Times of Central Asia previously reported, the new Tax Code will also introduce a luxury tax on high-value goods such as yachts and cigars.
