tax code - The Times Of Central Asia

Viewing results 1 - 6 of 9

Tax

Foreign Internet Platforms Paid Nearly $18 million in Taxes in Kazakhstan in January

Foreign digital platforms transferred nearly $18 million to Kazakhstan’s state budget in digital services tax, commonly known as the “Google tax”, in January 2026, according to the press service of the State Revenue Committee under the Ministry of Finance. Kazakhstan has applied the digital services tax since 2022. Over this period, 120 foreign companies have registered as taxpayers in the country, including 22 in 2025. Total revenue from the Google tax since its introduction has reached approximately $277.5 million. Of that amount, $117.5 million was collected in 2025, and more than $17.75 million in January 2026 alone. Under the Tax Code, second-tier banks and payment organizations are required to provide tax authorities with information on foreign companies that have undergone conditional registration. This data is used to assess the completeness and timeliness of VAT payments in e-commerce and the provision of digital services to individuals in Kazakhstan. Based on comparisons of bank data, payment system information, and actual VAT payments, tax authorities conduct desk audits. If arrears or underpayments are identified, notifications outlining the discrepancies are issued. Additional enforcement measures came into force on January 1, 2026. Under Article 89 of the Tax Code, state authorities are now authorized to block the internet resources of foreign marketplaces that fail to comply with desk audit notifications or evade VAT registration requirements. The State Revenue Committee emphasized that these measures are intended to ensure a level playing field for domestic and foreign market participants, improve tax compliance in the digital sector, and reduce the shadow economy without conducting on-site tax inspections. As previously reported by The Times of Central Asia, international companies including Google, Apple, Netflix, and Amazon have already registered in Kazakhstan under the Google tax regime. In May 2025, the U.S. company OpenAI also completed tax registration in the country.

Tax Reform

Tax Reform in Kazakhstan Could Lead to Drug Shortages

Kazakhstan’s new tax policy has triggered concerns over potential disruptions in the supply of medicines and medical devices. Industry leaders warn that complexities in administering value-added tax (VAT), along with legal inconsistencies in the updated Tax Code, could destabilize the country's pharmaceutical market. Ruslan Sultanov, chairman of Kazakhstan’s Association of Pharmaceutical and Medical Product Manufacturers, raised concerns during an online meeting with government and business representatives. He said the changes have already led distributors to refuse purchases of several essential medicines. Last year, Kazakhstan adopted a new Tax Code that increased the VAT rate from 12% to 16%. It also introduced zero and reduced VAT rates for specific sectors. During parliamentary discussions, lawmakers proposed exempting essential medicines from VAT and reducing the tax burden on medical institutions. Ultimately, authorities agreed to fully exempt more than 3,000 medicines purchased under the Guaranteed Volume of Free Medical Care (GVFMC) and Compulsory Social Health Insurance (CSHI) programs from VAT. However, Sultanov said these exemptions have not been sufficient to stabilize the market. According to him, the pharmaceutical sector is facing unprecedented administrative pressure. One of the most critical problems is the inconsistent taxation of medical devices procured under the GVFMC and CSHI frameworks. While medical services are completely exempt from VAT, a 5% VAT rate is still applied to medical devices. “As a result, hospitals are in a situation where they cannot offset the tax when purchasing medical equipment. After factoring in administrative costs, companies are losing 5-7%. This affects both domestic and foreign manufacturers,” Sultanov explained. The lack of clear guidance from government agencies has further complicated matters. Socially significant medicines, which were previously taxed at 5%, are now VAT-exempt but ambiguity around the new rules has led to widespread reluctance among distributors to place orders. “The confusion has created a bottleneck. For example, paracetamol is physically available in warehouses, but its movement is being blocked. Without timely clarification, we will face a shortage,” Sultanov warned. To resolve the issue, he proposed eliminating the fragmented VAT structure currently applied to the pharmaceutical sector. Sultanov also highlighted the risks associated with the under-declaration of customs values for imported drugs. He stated that customs officials continue to rely on outdated price data from a year ago, ignoring current market rates. This, combined with delays in approving maximum retail prices by the Ministry of Health, threatens the viability of long-term drug supply contracts signed before January 2026, particularly those involving medicines not produced domestically. His concerns are echoed by pharmacy industry leaders. Talgat Omarov, Chairman of the Kazakhstan Association of Independent Pharmacies, confirmed that the organization has submitted formal appeals to President Kassym-Jomart Tokayev and Senate leadership, calling for the complete exemption of the pharmaceutical sector from VAT, not just medications supplied under state programs. “Every day, customers come into pharmacies, see new price tags, complain, and leave. We hear this negativity constantly. Medicines are socially significant goods, and applying additional taxes in the current climate is dangerous,” Omarov said. To cope with increased taxes...

man-made mineral waste

Kazakhstan to Slash Extraction Tax for Processing Man-Made Mineral Waste

Kazakhstan's new draft Tax Code proposes a tenfold reduction in the mineral extraction tax (MET) for companies processing man-made mineral formations (MMF), a move expected to boost investment in mining waste reclamation and reduce environmental burdens. Currently, Kazakhstan taxes the processing of MMF, mineral residues left in waste dumps after the primary extraction of solid minerals, at standard MET rates. These rates range from 21.06% for chromite ore to 2% for mineral raw materials containing technical stones. The application of these standard rates to waste materials has discouraged subsoil users from reprocessing them. As a result, an estimated 55 to 60 billion tons of MMF have accumulated in dumps, tailing ponds, and storage facilities across the country’s mining enterprises, according to Gulnara Bizhanova of the Atameken Chamber of Entrepreneurs. She presented this data at the AMM-2025 Mining and Metallurgical Forum. In Kazakhstan, only 11% of MMF is currently being processed, compared to 70-80% in many developed countries, where such waste is either exempt from MET or subject to significantly reduced rates. “The draft Tax Code introduces a reduction coefficient of 0.1 for MET on the processing of MMF. The bill is still under consideration in the Senate,” Bizhanova stated. Bizhanova noted that this change would benefit both the government and the private sector. For instance, Qarmet, a leading Kazakh steel and mining firm, plans to launch 10 projects worth $137 million if the tax reduction is approved. “There are many investors interested in this area of MMF processing. It is also important to highlight that increasing waste processing will reduce the operational burden on active mines,” she added. Previously, The Times of Central Asia reported that Aibar Dautov, head of the Kazakhstan Mining Industry Association, urged reforms to the MET framework to enhance state revenue from both oil and solid mineral extraction.

Tax Reform

Kazakhstan’s Lower House Passes Controversial New Tax Code Amid Public Backlash

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...

Economy

Opinion: Kazakhstan’s Tax Reform May Come as an Unpleasant Surprise

Kazakhstan's tax reform has reached a critical juncture. This week, the Mazhilis, the lower house of parliament, approved the draft of the new Tax Code in its first reading. The sweeping document, comprising 822 articles, proposes the repeal of the current Tax Code along with the accompanying implementation law. While the reform fulfils directives issued by President Kassym-Jomart Tokayev in his 2022 and 2023 state-of-the-nation addresses, skepticism abounds. Experts and business leaders have voiced concerns, and lawmakers themselves have offered mixed reviews, with many adopting a critical stance. Concerns About Scope and Timing Though tax professionals broadly agree on the need for tax reform, some warn that the current version may be the most stringent in over two decades. Critics argue that without addressing structural inefficiencies in government spending, raising taxes alone will not yield the desired outcomes. They emphasize the need for a balanced approach that supports both fiscal sustainability and economic resilience. Adding to the unease is the timing. Kazakhstan, like many economies, faces mounting global pressures. The threat of a financial downturn, exacerbated by falling energy prices and international tariff disputes, has prompted urgent consultations at the highest level. Tokayev recently convened a closed-door meeting with the prime minister and the head of the National Bank, instructing them to finalize a government action plan to mitigate potential economic fallout and maintain investment flows. A Mixed Bag of Reactions Some analysts acknowledge that the existing Tax Code, adopted in 2008, is outdated. They argue that reforms are essential to address digitalization, evolving business models, and new global challenges. Calls for improved tax administration, especially the simplification of procedures and adoption of risk-based oversight, aim to ease pressure on law-abiding businesses while better targeting the informal sector. The draft law also seeks to limit inefficient tax exemptions and make incentives more focused and transparent. These changes are framed as part of Tokayev's broader economic transformation agenda, which prioritizes fair taxation, industrial processing, and innovation. Nonetheless, many entrepreneurs remain uneasy. Economic instability, lingering post-pandemic effects, geopolitical risks, and sanctions-related supply disruptions have left businesses vulnerable. Critics worry that introducing a more demanding tax regime now may fuel uncertainty and discourage investment. Additional concerns center on governance. Persistent issues of corruption, selective enforcement, and administrative overreach have eroded public trust. Without parallel reforms in public administration, experts argue that changes to tax policy alone may fall short. Divided Political Reception The draft Tax Code’s passage through its first reading does not guarantee smooth sailing. Even the ruling Amanat party, while supporting the bill, has voiced reservations. Its members have called for safeguarding small and medium-sized enterprises and enhancing investment incentives. The opposition Ak Zhol party has been the most vocal critic. Its leader, Azat Peruashev, characterized the proposal as a fiscal crackdown rather than genuine reform. The faction demands greater transparency, public consultations, and a reconsideration of proposed VAT hikes and lower registration thresholds. Meanwhile, the pro-business Respublica party supports the reform in principle but insists on greater simplification in business-tax...