Page 406 – The Times Of Central Asia

29 Jan 2025

Central Asia, Kazakhstan, Business & Economy, Kazakhstan Business & Economy

Kazakhstan Introduces Tax Incentives to Encourage Business Lending

February 4, 2025
By Dmitry Pokidaev

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.

29 Jan 2025

Central Asia, Home, Uzbekistan, Uzbekistan Features, International Affairs, Features, Uzbekistan International Affairs

Uzbekistan Airways Reroutes Flights to Europe, Avoiding Russia and Belarus

February 19, 2025
By Sadokat Jalolova

Uzbekistan Airways has altered its flight routes to Europe, bypassing Russian and Belarusian airspace. The airline’s chairman, Shukhrat Khudoykulov, announced the decision at a press conference on January 28, according to local media reports.

Flights are now taking a more southern route through Azerbaijan and Turkey. The change took effect on January 20, 2025.

Reason for the Rerouting

The airline’s press service told Kun.uz that the decision was made based on a recommendation from the European Union Aviation Safety Agency (EASA) and was not related to the recent Azerbaijan Airlines crash.

“This is a recommendation from the European Aviation Safety Agency since we also serve European passengers,” the airline’s statement said.

The change comes in the wake of the Azerbaijan Airlines crash on December 25, 2024. The aircraft, which was flying from Baku to the Russian city of Grozny, crashed near Aktau, Kazakhstan. Of the 67 people on board, 38 died, while 29 survived.

Initial reports suggested that a Russian air defense system may have mistakenly shot down the plane during a Ukrainian drone attack on Grozny. A missile reportedly exploded near the aircraft, damaging its fuselage.

Kazakhstan, which initially led the investigation, has transferred the case to Brazil’s aviation safety agency (CENIPA). The findings have been sent back to Kazakhstan and are expected to be released soon.

Impact on Flight Times and Costs

In response to Repost.uz, Uzbekistan Airways clarified that the change was made as a precautionary measure and also to helps optimize flight routes.

The rerouting has increased travel distances. For example, the Tashkent-Munich flight, which previously covered 4,849 kilometers when flying through Russia, now spans 5,156 kilometers. This adds 30 to 40 minutes to flight times and raises operational costs for the airline.

29 Jan 2025

Central Asia, Tajikistan Justice, Home, Justice, Tajikistan, Tajikistan Features

UNHCR Again Urges Tajikistan to Stop Deporting Afghan Refugees

July 28, 2025
By Sadokat Jalolova

The UN High Commissioner for Refugees (UNHCR) has called on Tajikistan to immediately halt the deportation of Afghan refugees, following reports that dozens were forcibly returned to Afghanistan last month.

According to UNHCR, at least 80 Afghan refugees were deported from Tajikistan in December 2024, despite many holding valid refugee documents. The agency warned that such actions violate international protection standards and could put deportees at risk.

By the end of 2024, around 9,000 Afghan refugees were residing in Tajikistan. UNHCR has expressed concern that further deportations could endanger many more lives.

Regional Context and Increasing Deportations

Tajikistan is not the only country tightening its stance on Afghan refugees. Iran and Pakistan have also intensified deportations in recent months. Reports indicate that Iran has expelled 586,000 undocumented Afghans since the start of the current solar year. Meanwhile, the Taliban’s Ministry of Refugees and Repatriation stated that nearly 12,000 Afghan migrants have returned from Pakistan, Iran, and Turkey in the past three weeks.

The rise in deportations has added pressure on Afghan refugees, many of whom are already struggling due to Afghanistan’s worsening humanitarian crisis. UNHCR has reiterated its appeal for international cooperation, urging host countries to balance national security concerns with humanitarian obligations.

Previously, Mosawer Bahadori, head of Afghanistan’s Migration Committee (Aryana) in Tajikistan, urged Tajik authorities to respect refugee rights and uphold their international commitments in protecting displaced Afghans.

29 Jan 2025

Central Asia, Uzbekistan Environment, Environment, Uzbekistan

Uzbekistan Aims for 50% Green Energy by 2030 in Major Power Expansion

February 5, 2025
By Sadokat Jalolova

On January 28, President Shavkat Mirziyoyev held a meeting to outline Uzbekistan’s power sector development strategy for 2025-2035.

In the past eight years, electricity production has increased by 38%, reaching 81.5 billion kilowatt-hours. Private sector participation has grown significantly, adding 11.2 gigawatts of new capacity. As a result, private power generation now accounts for 24% of the total, while renewable energy contributes 16%.

Rising Demand and Infrastructure Expansion

Household electricity consumption has doubled since 2016, surpassing 21 billion kilowatt-hours, driven by rising incomes and greater use of home appliances. By 2030, Uzbekistan’s population is expected to reach 41 million, and the economy is projected to grow 1.5 times, increasing electricity demand to 117 billion kilowatt-hours. By 2035, demand is expected to reach 135 billion kilowatt-hours – 1.7 times the current level.

To meet this growing demand, the government plans to build new power plants and energy storage facilities. Infrastructure expansion will include 7,000 kilometers of new power lines and the introduction of digital management systems to ensure efficient distribution. If one region faces shortages, excess capacity from another will be redirected to balance supply. Over the next five years, $4 billion will be invested in modernizing the national power grid.

Renewable Energy Targets and Efficiency Measures

A key priority is reducing electricity costs by expanding renewable energy sources. Uzbekistan is considered to have strong solar, wind, and hydro potential, and by 2030, half of the country’s electricity is expected to come from these sources. Plans include constructing 3,000 small hydropower plants with a combined capacity of 164 megawatts and adding 750 megawatts from solar and wind power.

The government had previously announced a goal to increase renewables’ share to 40% of total energy consumption by 2030, but the new target raises that figure to 50%.

In addition to expanding clean energy, Uzbekistan is working to improve industrial energy efficiency. Some chemical and metallurgical plants consume twice as much energy as similar facilities worldwide, while cement production in the country requires 1.2 times more energy than global benchmarks. The goal is to reduce energy waste by 10 – 15% across all industries and cut electricity losses from 14% to 8 – 9% by 2030.

Foreign Investment and Local Industry Opportunities

International investors are already engaged in energy projects worth $26 billion, creating opportunities for local companies to supply equipment and materials.

To guide these developments, the government has been tasked with preparing a long-term electricity strategy until 2035. The plan will focus on ensuring energy security, improving efficiency, and training skilled professionals to support Uzbekistan’s transition to a more sustainable power sector.

29 Jan 2025

Central Asia, Home, Kazakhstan, Business & Economy, Kazakhstan Business & Economy, Features, Kazakhstan Featurees, Kazakhstan Home

Tokayev Outlines Economic Reforms and Calls for Revised Energy Contracts

January 29, 2025
By Andrei Matveev

On January 28, Kazakhstan’s capital Astana hosted an expanded government meeting led by President Kassym-Jomart Tokayev. The event focused on the country’s socio-economic development in 2024, but this year’s discussion carried broader implications, addressing both domestic and international concerns.

Addressing Budget Constraints

From the outset, Tokayev made it clear that a key issue for his government is the state budget’s financial shortfall. Analyst Gaziz Abishev noted on his Telegram channel that the problem is not just a lack of funds but a long-standing habit – dating back to 2003 – of addressing challenges by simply increasing spending.

“There is no longer an oil windfall to revitalize the dry economy as there was 20 years ago,” Abishev wrote.

Adding to the uncertainty, Kazakhstan’s oil revenues face potential disruption from Donald Trump’s stated intention to drive down global hydrocarbon prices.

Tokayev outlined a range of measures to fill budget gaps, urging his government to take bold, unconventional steps. He called on officials to act in the country’s best interests without fear of pressure from the Anti-Corruption Service or public opinion. He also stressed the importance of depoliticizing economic partnerships, particularly with Russia and China, cautioning against allowing Russophobic or Sinophobic rhetoric to interfere with business deals.

“Money must be attracted from abroad, and this is more important than ever. Without investment, we cannot sustain ourselves. Money doesn’t smell, but it disappears. We need to attract investment from all sides – within the law – without falling into populism. The future of the national economy, and to some extent the country as a whole, is at stake,” Abishev commented.

Public Reaction to Tax Reforms

Although tax reform was only the sixth of eight key points in Tokayev’s speech, it quickly became the most widely discussed issue among the public.

Kazakhstan’s value-added tax (VAT) is currently 12%, with a sufficiency threshold of 78 million tenge ($150,937). The government is considering raising the VAT rate to 20% and lowering the sufficiency threshold to 15 million tenge ($29,026). If implemented, nearly all small businesses would become VAT payers, while the increased tax rate is expected to drive inflation. The government maintains that inflation will not exceed 4.5%, but Tokayev’s mention of “belt-tightening” has already led many to expect rising retail prices.

To offset the burden on businesses, the government proposes eliminating mandatory employer pension contributions and reducing the social tax.

However, Tokayev himself expressed reservations about cutting the social tax, emphasizing that regional governors (akims) need financial incentives.

“Think again. I believe it would be wrong to deprive akims of incentives, especially financial ones. After all, the regions are the country. Find a solution. We will meet again to discuss these issues,” he told the government.

The tax reforms will also be debated in Parliament, where the lower house is currently reviewing the draft of the new Tax Code. The government will have to negotiate with members of the Majilis and Senate over the VAT rate, sufficiency threshold, and other sensitive issues.

Messages to Foreign Partners

Tokayev’s speech contained several key messages aimed at international audiences, particularly in the West.

One recurring theme was the need for Kazakhstan to focus on technological partnerships with China, particularly in water conservation, IT, and artificial intelligence. Tokayev highlighted the success of the DeepSeek startup, suggesting that western firms are losing the technological race in Central Asia.

Another major announcement concerned Kazakhstan’s nuclear energy sector. The president confirmed that three nuclear power plants will be built, instructing the government and the Samruk-Kazyna sovereign wealth fund to develop long-term strategies for the industry’s growth.

In response, Russian media outlets have speculated about Kazakhstan’s potential interest in developing nuclear weapons. Russian analyst Anatoly Nesmiyan noted that Kazakhstan may reconsider its non-nuclear status due to regional security concerns.

“The precedent of Ukraine – where the Budapest Memorandum proved to be a mere piece of paper – combined with a northern neighbor that has a peculiar view of friendship and good-neighborliness, and periodic claims over Kazakhstan’s territory, naturally raises the question of whether Kazakhstan should regain nuclear weapons. For now, this remains hypothetical, but who knows…” Nesmiyan wrote.

Regardless of such speculation, the competition for contracts to build Kazakhstan’s nuclear power plants is nearing its final stage, and Tokayev signaled that decisions will soon be made.

Renegotiating Production-Sharing Agreements

One of the most consequential parts of Tokayev’s speech was his hint at renegotiating production-sharing agreements (PSAs) under the framework of subsoil use reforms.

“The implementation of production-sharing agreements for large fields has allowed Kazakhstan to become a reliable supplier of energy to the global market. These projects have made a great contribution to the country’s socio-economic development. However, large investments require a long-term planning horizon. Therefore, the government must intensify negotiations on extending PSA contracts, possibly on revised terms that are more favorable for Kazakhstan,” Tokayev said.

For years, the Ak Zhol parliamentary faction has called for the declassification of PSA contracts, but in Kazakhstan, these agreements have remained as closely guarded as U.S. government files on the Kennedy assassination.

Tokayev’s remarks send a clear signal to American and European companies that he is prepared to bring these contracts into the public domain. By doing so, the government could cite public pressure as a justification for renegotiating PSA terms on conditions more advantageous to Kazakhstan.

28 Jan 2025

Home, Justice, Kazakhstan Justice, Kazakhstan, Features, Kazakhstan Featurees

Wild Arman Sentenced: From Thief-In-Law to Coup Plotter

January 29, 2025
By Andrei Matveev

On January 27, another high-profile trial related to the January 2022 events concluded in Almaty. More than 40 individuals were in the dock, but the main figures in the proceedings were three individuals: former Almaty city council deputy and popular blogger Kairat Kudaibergen, former head of the Fifth Department of Kazakhstan’s National Security Committee Ruslan Iskakov, and crime boss Arman Jumageldiev, better known by his criminal nickname, ‘Wild Arman.’

Harsh Sentences

Most of the defendants received short sentences and were released due to time already served. However, for the main figures in the case, the court handed down the following punishments:

Kairat Kudaibergen, former deputy and entrepreneur, received eight years in prison. He was also banned from appearing on social media, organizing rallies, debates, and events, and publishing in the media.
Ruslan Iskakov, the former head of the Fifth Department of the National Security Committee, was sentenced to 15 and a half years in prison.
Arman Jumageldiev (Wild Arman) was sentenced to 20 years in prison. He was prohibited from participating in organizations, organizing events, and publishing in the media or on social networks.

In addition to this trio, two other lengthy sentences were handed down: former financial police agent Talgat Makhatov received 15 years, whilst journalist Berdakh Berdymuratov was sentenced to seven years.

During the trial, two of the four charges initially brought against Kairat Kudaibergen were dropped. Meanwhile, Arman Jumageldiev, who was originally charged under eleven articles of the Criminal Code of Kazakhstan, faced eight charges by the end of the trial. The 40-year-old crime boss, who along with his defense team has long denied his ties to organized crime, will be released close to the age of retirement should his sentence remain unchanged after his appeal.

Under Surveillance

Senior Prosecutor of the Almaty Regional Transport Prosecutor’s Office, Mukhit Rysbekov, provided detailed comments on the verdict for Wild Arman (Arman Jumageldiev), revealing the defense’s strategy during the trial.

“The court deliberated on the case for about a year. During this time, Jumageldiev’s defenders tried to present him to the court and the public as a patriot, a national hero who helped and protected citizens during the tragic January events. Despite the active campaign organized by Jumageldiev and his defense to rehabilitate his image, we managed to prove the opposite. We proved that back in 2016, long before those events, Jumageldiev led a criminal organization, an armed gang, which included the same representatives of the criminal world,” said Rysbekov.

Commenting on Jumageldiev’s sentencing, political analyst Daniyar Ashimbaev noted that the trial had addressed one of the key facets in a broader scheme.

“It is clear that the National Security Committee (KNB) was ‘tracking’ this organized criminal group (OCG), which during the January events was supposed to take on the role of establishing ‘public governance,’ subduing looters, presenting 20 pre-captured individuals as instigators, and ultimately calling for power to be handed over to a ‘people’s government’ led by the coup organizers,” Ashimbaev stated. “This was evident as early as the spring of 2022 in the immediate aftermath.”

This, Ashimbaev believes, explains why the trial of Jumageldiev and other figures involved in the Almaty riots was so protracted. It was first necessary to prove the intent for a coup d’état and the existence of a sprawling conspiracy involving both law enforcement officials and criminal elements.

It is no secret that Kazakhstan’s intelligence services have, at times, utilized criminal networks to their advantage. Jumageldiev’s biography serves as a vivid illustration of this practice.

The Path to “Success”

The wider public in Kazakhstan first learned about the figure of Wild Arman (Jumageldiev) in 2005. At the time, the country was preparing for presidential elections. The opposition had united under the coalition, “For a Just Kazakhstan,” promoting their candidate, Zharmakhan Tuyakbai, a former speaker of the lower house of parliament who had recently left President Nursultan Nazarbayev’s party amidst a scandal.

An event in Shymkent meant to facilitate a meeting between Tuyakbai and his supporters with local residents was disrupted by hooligans, led by none other than Wild Arman. The group stormed the venue, ransacked the place, and drove the politicians under the tables. Opposition figures claimed at the time that the raid was coordinated by so-called “plainclothes men,” alleged to be undercover officers from the local KNB.

Three years later, in 2008, Wild Arman became embroiled in a conflict in Shymkent with the local “beer king” Tokhtar Tuleshov. Notably, in 2016, Tuleshov was accused of attempting a coup d’état allegedly linked to mass land protests that swept the country.

During the 2008 incident, a shootout occurred in which Jumageldiev was wounded, and two of his bodyguards were killed. Wild Arman fled to Kyrgyzstan. Shortly thereafter, in Shymkent, the suspected assailants in the attack were shot dead. Later, Jumageldiev was arrested in Almaty and served a three-year prison sentence.

Incidentally, during his time in Kyrgyzstan, he married a local model, Aikol Alikzhanova, and in 2021, the couple welcomed a daughter.

Another high-profile appearance in the media by Arman Jumageldiev came in 2019. Reports in Russian outlets claimed that Arman, who had joined the inner circle of Azerbaijani “thief-in-law” Nadir Salifov (known as Lotu Guli), had assaulted Georgian crime lord Guram Chikhladze (Kvezhovich). According to the unwritten rules of the post-Soviet criminal underworld governed by “thieves-in-law,” Wild Arman had no right to lay a hand on Kvezhovich, as Arman was considered a minor figure. However, according to Lotu Guli, Kvezhovich was so frightened that he fled the meeting. This incident occurred in Turkey, where Arman was hiding from the Kazakh authorities.

In Turkey, Jumageldiev began rebranding his image, presenting himself as a respectable blogger and a patriot. In one instance, Arman urged his compatriots to confront British comedian Sacha Baron Cohen for “insulting Kazakhs” in the Borat film series. He also interrogated the organizer of a financial pyramid scheme that had defrauded 17,000 Kazakh citizens. During the pandemic, he organized the free distribution of medicines and medical masks.

It was clear that even then, Wild Arman was laying the groundwork for the January events of 2022. Notably, 2019 was the year Nursultan Nazarbayev transferred presidential powers to Kassym-Jomart Tokayev, a transition that likely did not sit well with certain figures in Nazarbayev’s circle. It appears that the plan for a coup began taking shape at that time, with Arman Jumageldiev positioning himself as a “protector of the people.”

In handing down its sentence, on January 27 the court in Almaty put a period to this protracted story; at least for now.