Trade between Kazakhstan and China continues to grow, reaching $43.8 billion in 2024, according to China’s General Administration of Customs. Kazakhstan’s exports to China amounted to $15.8 billion, marking a 9% increase from the previous year. These figures were announced by Han Chunlin, China’s newly appointed ambassador to Kazakhstan, during a meeting with Kazakh Minister of Trade and Integration Arman Shakkaliyev on February 8.

“This trend confirms our steady progress toward the ambitious goal of doubling bilateral trade turnover in the near future,” the ambassador stated.

Strengthening Trade and E-Commerce Cooperation

The meeting focused on expanding Kazakh-Chinese trade and economic cooperation, with particular emphasis on e-commerce platforms.

Shakkaliyev highlighted that bilateral trade reached a historic high in 2024 and reaffirmed Kazakhstan’s commitment to diversifying its exports while expanding the range of products supplied to China. He also announced plans for trade and economic missions in 2025, alongside Kazakhstan’s participation in major exhibitions in China.

A key discussion point was the development of online trade through leading Chinese e-commerce platforms, including JD.com, Alibaba, and Douyin.

Kazakhstan’s Growing Presence in Chinese E-Commerce

• Alibaba: Launched in 2022, Kazakhstan’s dedicated section on Alibaba now includes 290 domestic companies offering over 7,500 products. Total sales on the platform have already surpassed $260 million.
• JD.com: In 2023, JD.com opened a Kazakhstan section, featuring over 60 products. Revenue from Kazakhstani goods sold on the platform grew from RMB 1 million in 2023 to RMB 1.3 million in 2024.

Kazakhstan’s e-commerce industry has seen rapid growth in recent years. According to the Ministry of Trade and Integration, online transactions from January to November 2024 totaled approximately 3.2 trillion KZT (over $6 billion), accounting for 14.5% of total retail trade.

As Kazakhstan strengthens its trade ties with China, digital commerce is expected to play an increasingly important role in bilateral economic relations.

Kazakhstan’s Cabinet of Ministers has proposed a differentiated value-added tax (VAT) structure, with rates ranging from 0% to 16% and an intermediate rate of 10%. This announcement was made by Vice Minister of National Economy Azamat Amrin. The proposal comes after President Kassym-Jomart Tokayev rejected an earlier plan to increase the VAT rate to 20%.

“We propose the following mechanism: a general VAT rate of 16%, full exemption from VAT for agricultural producers, and an intermediate rate of 10% for certain industries. Thus, the government’s proposed differentiation consists of 16%, 10%, and 0% rates,” Amrin said during a meeting with business representatives in Astana.

The government plans to determine which industries will qualify for the 10% VAT rate following consultations with the business community. Amrin also noted that agricultural VAT exemptions currently apply to peasant farms (family-labor associations), while larger legal entities in the sector pay about a third of all applicable taxes due to existing tax incentives. Now, the government is ready to abolish VAT for these larger agricultural enterprises as well to enhance the competitiveness of Kazakhstan’s agricultural products.

Budget Implications of the VAT Reform

Kazakhstan’s current general VAT rate stands at 12%. The government expects that raising it to 16% will generate an additional 4 – 5 trillion KZT ($7.8 billion – $9.7 billion) in annual tax revenues.

In late January 2025, Minister of National Economy Serik Zhumangarin estimated that revising the VAT rate could bring in an additional 5 – 7 trillion KZT ($9.7 billion – $13.6 billion). At that time, authorities were considering a VAT increase to 20%, but late last week, President Tokayev publicly opposed such a sharp tax hike.

Tokayev Calls for a Balanced Approach

“It is necessary to explore different options, taking into account the specifics of various economic sectors,” Tokayev said during a meeting with representatives of Kazakhstan’s largest businesses.

“I have not previously commented on this matter, as every word I say can be interpreted as a direct order due to my official status. However, I now want to make my position clear: the VAT rate should be differentiated. The rate proposed by the government was still too high,” the president stated.

Tokayev emphasized the need for a balanced approach that supports businesses while also increasing budget revenues. “The state needs optimal solutions that, on the one hand, create favorable conditions and do not hinder business, and on the other hand, bring order to the tax system and ensure sustainable budget growth,” he added.

Following the president’s remarks on Friday, February 7, the government revised its VAT reform plan, announcing the new differentiated rates on Monday, February 10.

VAT Reform as Part of Kazakhstan’s Broader Tax Overhaul

As The Times of Central Asia previously reported, the draft of Kazakhstan’s new Tax Code, which includes the VAT reform provisions, also proposes a differentiated corporate income tax (CIT) rate for banks. The aim is to encourage business lending by making it more financially attractive than consumer lending or investments in government securities.