On April 30, the Mazhilis, the lower house of Kazakhstan’s parliament, approved a new Tax Code by majority vote. The draft law, part of President Kassym-Jomart Tokayev’s broader economic reforms, has triggered intense public and political debate. While proponents highlight its emphasis on modernization and fairness, critics warn of increased pressure on businesses and potential inflation. The final decision now rests with the president, following Senate review.
Key Reforms and Adjustments
According to Berik Beisengaliyev, head of the Mazhilis working group, the final version of the Tax Code diverges significantly from the original draft submitted in August 2024.
One of the major changes concerns VAT (value-added tax). The government’s initial proposal to raise the VAT rate to 20% was scaled back to 16%. The threshold for mandatory VAT registration has been raised from 15 million to 40 million tenge. Reduced VAT rates are set for medical services and medicines, 5% from 2026 and 10% from 2027. Goods and services tied to guaranteed free medical care, compulsory health insurance, and treatment of orphan and socially significant diseases will be VAT-exempt.
Additionally, the VAT exemption will extend to socially significant food items, books published domestically, and related publishing services. Agricultural producers will benefit from a higher VAT offset, increased from 70% to 80%.
Other reforms include a shift from a permissive to a prohibitive activity list, with a unified 4% tax rate that regional maslikhats can adjust by ±50%. Special tax regimes for business-to-business transactions are also being expanded.
Corporate income tax (CIT) has been reduced to 5% from 2026 and 10% from 2027 for social sector organizations. The social tax deduction for people with disabilities has increased to 5,000 MCI (19.6 million tenge in 2025). Meanwhile, the CIT rate for banks and the gambling industry has been raised to 25%, though a 20% rate remains on banks’ business lending income.
A progressive income tax scale will be introduced: 10% on annual wages up to 8,500 MCI (33.5 million tenge or roughly $65,000), and 15% on income above that threshold. For dividends, the rate will be 5% on income up to 230,000 MCI (1 billion tenge, or $2 million), and 15% thereafter.
The code also proposes higher excise taxes on alcohol, tobacco, and heated tobacco products, along with a new excise on energy drinks as part of a health initiative.
Land use provisions have been amended to penalize inefficient use of agricultural land, with payment rates increasing up to 100-fold. Mineral resource usage rates will vary based on license duration and the number of plots held.
Political Dissent and Criticism
The Ak Zhol party opposed the code in both readings, citing disproportionate fiscal burdens on SMEs while sparing large extractive firms. The party also criticized the VAT hike as inflationary and warned about the opaque nature of the risk management system (RMS), which they say allows for discretionary actions by tax authorities.
“The code is bloated with over 100 new articles, making it more difficult for entrepreneurs to navigate. This is not what President Tokayev instructed,” the party stated.
Mazhilis member Erlan Stambekov abstained from voting and publicly explained his reasons:
“I couldn’t vote ‘yes’ because I believe these changes do not support the development of our economy or SMEs. Quite the opposite,” he wrote on Facebook. “The code is being used to plug a fiscal gap the government can’t cover, even with National Fund borrowings.”
Political analyst Daniyar Ashimbayev echoed these concerns, suggesting that the reform package was poorly timed and inadequately managed:
“Of all the fiscal policy scenarios, the most unfortunate was chosen at the most unfortunate time. Many officials appear unconvinced, some remain silent, and others voice their views on social media. It signals a lack of political coordination and common-sense governance.”
Uncertain Presidential Approval
Despite its passage in the Mazhilis, the future of the new Tax Code remains uncertain. Given the public and political pushback, President Tokayev may call for revisions or delays. As Ashimbayev put it, this could be a moment to “let off steam” rather than push through contentious reforms unchanged.
