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.
