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Registered Businesses in Kazakhstan Rise More Than 20% Despite Tax Reform

The number of registered businesses in Kazakhstan increased by more than 20% during the first half of 2026, according to government data, easing earlier concerns that the country’s new Tax Code would trigger widespread business closures. The growth came despite higher value-added tax (VAT) rates and tighter registration requirements introduced this year. During a government meeting, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin said the number of registered business entities had reached 2.939 million by the end of June, up by nearly 499,000, or 20.4%, from the beginning of the year. The strongest increase came from individual entrepreneurs and self-employed workers. Their combined number rose from 1.86 million to 2.352 million over six months, while the number of self-employed workers reached 688,597. The expansion also coincided with improved fiscal performance. Government revenues increased by almost 16% during the reporting period, while VAT receipts were nearly 1.5 times as high as a year earlier, according to official figures. Growth was also recorded among corporate businesses. The number of registered legal entities increased from 579,756 to 587,117 during the first half of the year, while the number of VAT payers rose from 135,845 to 158,194. The figures indicate that businesses have largely adapted to the new tax environment despite concerns voiced before the reforms took effect. Earlier this year, analysts warned that higher taxes and stricter registration rules could force many small businesses to close, but the first six months of data have not supported those expectations. The structure of Kazakhstan’s small and medium-sized business sector also remained largely unchanged. More than 60% of all SMEs continue to operate in trade and agriculture, as well as other services. These remain the country’s largest entrepreneurial sectors. Growth varied across industries, reflecting differences in business activity. Among small legal entities, the mining sector recorded the fastest increase at 2.9%. Construction and agriculture both grew by 2.5%, while information and communications expanded by 2.4%. The figures indicate continued investment in traditional industries and digital services. Among medium-sized enterprises, real estate posted the strongest growth at 5.8%, nearly double the pace of the next-fastest sector. Finance and insurance grew by 3.2%, while other service industries expanded by 3.1%, reflecting continued demand in domestically oriented sectors. The figures also point to the growing role of small and medium-sized businesses in Kazakhstan’s economy. SMEs accounted for 40.9% of gross domestic product in 2025, up from 33.5% in 2021, according to official data. The sector has become an increasingly important source of investment and regional development, while contributing to economic diversification. Employment data reflect the same trend. During the first quarter of 2026, Kazakhstan had 9.4 million employed people, including 4.5 million working in small and medium-sized businesses. This means that nearly one in two employed people now works in the SME sector. The first-half data indicate that Kazakhstan’s business sector continued to expand despite a more demanding tax environment. While it remains too early to assess the long-term impact of the tax reform, the increase...

Small Businesses in Kyrgyzstan Struggle With Expensive Loans and Border Delays

Small and medium-sized businesses now account for more than half of Kyrgyzstan’s economy, but entrepreneurs continue to face high borrowing costs, logistical bottlenecks and rising operating expenses, according to First Deputy Chairman of the Cabinet of Ministers Daniyar Amangeldiev. According to Amangeldiev, the share of small and medium-sized enterprises (SMEs) in the national economy has reached 51.7%, making the sector one of the country’s key drivers of employment and domestic demand. “The main obstacle at the moment is access to financing,” he said during a press conference in Bishkek. Amangeldiev noted that average lending rates in Kyrgyzstan remain at around 19-20%, while the profitability of many businesses does not exceed 15%. As a result, borrowed capital becomes prohibitively expensive, limiting companies’ ability to expand. The government is currently negotiating with the banking sector to reduce loan costs and has already allocated approximately $3.4 million to support small and medium-sized businesses. Authorities have also introduced interest-rate subsidies to expand entrepreneurs’ access to financing. In addition to expensive credit, businesses continue to face logistical and customs-related difficulties. According to Amangeldiev, delays in certification procedures and border clearance disrupt supply chains and reduce trade turnover. “While cargo remains stalled at the border, entrepreneurs’ financial resources are effectively frozen together with the goods,” he said. The government is placing particular emphasis on the agricultural sector, which remains one of the country’s largest employers. The Cabinet of Ministers has instructed financial institutions to accelerate loan issuance for agricultural producers, noting that the speed of capital turnover is critical for agribusiness operations. The Kyrgyz authorities are continuing efforts to bring more businesses out of the shadow economy. In 2024, the government abolished part of the voluntary patent-based trading system and required entrepreneurs, including small traders and some tax-exempt businesses, to use cash registers and digital fiscal systems. The reforms triggered resistance among some entrepreneurs. However, authorities argue that increasing transparency in trade is necessary to broaden the tax base and modernize the economy.

Kazakhstan’s SMEs Face Severe Labor Shortage

Small and medium-sized enterprises (SMEs) in Kazakhstan have become one of the country’s main sources of employment, but are facing a severe labor shortage, according to a joint report by Mastercard and KPMG. The report identifies workforce shortages as one of the most pressing challenges for SMEs, with nearly half of businesses reporting acute staffing deficits. The main reasons cited are the limited supply of qualified specialists and their high cost. According to the report, SME executives say, “It is difficult to find qualified employees, especially production managers: candidates do not meet requirements, and staff are not motivated to develop, despite high salaries and good working conditions. Scaling up the business requires increasing the number of skilled employees, which is constrained by limited financial resources and labor shortages.” At the same time, 90% of surveyed business leaders say they face high salary expectations from potential employees, which smaller firms struggle to meet. Around 70% of respondents also acknowledge that SMEs are widely perceived as less prestigious places to work. Labor productivity in micro and small businesses remains more than twice as low as in medium and large enterprises. In 2025, a worker in a small business generated an average of about $10,100, compared with $34,300 in medium-sized firms, and the gap continues to widen. Limited access to financing and the high cost of borrowing also remain major constraints for SMEs. Additional factors hindering SME development include an unstable tax and regulatory environment, as well as broader macroeconomic volatility. Despite these challenges, SMEs are a key source of employment in Kazakhstan. Over the past five years, employment in the sector has grown from 40% to 50% of the workforce. Today, around 4.7 million people out of 9.3 million employed nationwide work in SMEs, meaning roughly one in two workers is employed in this segment. According to the report, SME employment has been growing at an average annual rate of 6%, while employment in other sectors has declined by about 3% per year. “The concentration of employment in SMEs makes the labor market vulnerable to tax and regulatory changes: negative shocks in the sector could directly translate into rising unemployment,” the report notes. As previously reported by The Times of Central Asia, SMEs currently account for about 40% of Kazakhstan’s GDP, a figure that remains below benchmark countries such as Turkey (41%), the United States (44%), and Uzbekistan (52%).