Tax - The Times Of Central Asia

Viewing results 1 - 6 of 40

Kyrgyzstan to Introduce Mandatory QR Code Tax Payments

Beginning July 1, 2025, all taxes and insurance contributions in Kyrgyzstan must be paid exclusively using a unique payment code or QR code. The change was announced by the press service of the State Tax Service (GNS) of the Kyrgyz Republic. The new system will apply to taxes, non-tax revenues, and mandatory insurance contributions. Taxpayers will be able to generate a QR code through their account on the State Tax Service website or via a dedicated mobile application. Alternatively, QR codes can be obtained at Business Service Centers or local tax offices. Mirlan Rakhmanov, Deputy Chairman of the State Tax Service, emphasized that the shift to QR code payments is designed to enhance transparency and streamline the payment process. “Payment via QR code enables real-time crediting of funds to the state budget, eliminates manual entry errors at banks, accelerates service delivery, and reduces the need for queuing,” Rakhmanov stated. Banking sector representatives who attended consultations with tax officials expressed readiness to support the transition. The State Tax Service confirmed that banks are technically equipped to implement the new system without disruptions. The announcement comes as part of a broader package of reforms aimed at modernizing tax administration. The agency reported that it has intensified analytical efforts to combat tax evasion, particularly schemes involving the artificial fragmentation of businesses to qualify for tax benefits intended for small enterprises. “The State Tax Service possesses the digital tools necessary to monitor economic activity, including through data-sharing arrangements with other government agencies,” the statement added.

tax code reforms high earners tax increase taxes Tax

Kazakhstan to Increase Taxes for High Earners

The Kazakh Ministry of National Economy has submitted a second package of amendments to the tax legislation to parliament, proposing an increase in the individual income tax rate for high earners. The second package was submitted to the Mazhilis (the lower house of the Kazakh parliament) on April 25. One of the key provisions is the introduction of differentiated individual income tax rates based on employees' earnings. "Citizens with lower incomes will pay personal income tax at a lower rate than high-paid workers," the Ministry of National Economy stated. The ministry has not specified the exact income levels that will be subject to the higher rate. However, in early April, Minister Serik Zhumangarin indicated to parliamentarians that an increased rate of 15% was being proposed for employees whose annual income exceeds 8,500 monthly calculation indices (MCI). Currently, one MCI in Kazakhstan is valued at 3,932 KZT ($7.64). By 2026, when the new Tax Code is expected to come into force, it is planned to rise to 4,129 KZT ($8). Based on these figures, the threshold for the increased personal income tax rate would start at 35 million KZT per year (approximately $68,000) or 2.9 million KZT per month ($5,600) in 2026. Not all of a high earner's salary would be taxed at the increased 15% rate. Instead, only the portion exceeding the 2.9 million KZT threshold would be taxed at the higher rate; income up to that threshold would continue to be taxed at the standard 10% rate. Currently, Kazakhstan levies a flat personal income tax rate of 10%. The Ministry of National Economy projects that the introduction of a progressive scale could increase tax revenues by 70 billion KZT per year (approximately $13.5 million). Additional Tax Code Reforms The ministry also proposed optimizing deductions for medical, education, and social contributions. A single basic deduction of 30 MCI per month would be introduced, replacing the current deduction of 14 MCI. All additional deductions would be eliminated, aiming to simplify accounting procedures and reduce the administrative burden for individuals and employers. At present, employees can exempt from taxation a portion of their salary equivalent to 14 MCI, or about 55,000 KZT ($106), upon request. This exemption is available to all working citizens but can be used at only one place of employment. Under the proposed changes, starting in 2026, Kazakhstani citizens would be able to exempt 123,800 KZT ($239) per month from taxation. The ministry also proposed strengthening liability for violations related to compulsory social and health insurance and the use of special tax regimes. These measures are part of a broader strategy to reinforce tax compliance across the country. In total, the government has proposed 71 amendments to the draft new Tax Code and related legislation, along with 67 amendments to the current Tax Code. As previously reported by The Times of Central Asia, the Mazhilis approved the draft of the new Tax Code in its first reading in early April. However, the proposed reforms continue to provoke debate and...

Central Asia Tax e-Commerce Tax Burdens

Foreign E-Commerce Platforms in Central Asia Face New Tax Burdens

Local business owners argue that foreign marketplaces enjoy unfair competitive advantages. To address this, Central Asian authorities plan to impose new tax requirements. For consumers, this move could mean higher inflation. Unequal Conditions In February, members of Kazakhstan’s Mazhilis highlighted that foreign marketplaces pay four times less in taxes than their local counterparts. Deputies from the Ak Zhol party, which advocates for business interests, have proposed requiring foreign e-commerce platforms to register with Kazakhstan’s tax authorities and pay value-added tax (VAT) on revenue from local buyers. This proposal targets major marketplaces such as Temu, Amazon, and AliExpress. In 2023, foreign marketplaces contributed just 4.8% of their turnover to Kazakhstan’s treasury, leading to an estimated budget shortfall of tens of millions of dollars. By contrast, Kazakhstani marketplaces face a significantly higher fiscal burden, paying an average of 16.3% in taxes. Local entrepreneurs using domestic platforms may pay up to 62% in various fees and levies, lawmakers claim. They argue that this imbalance undermines the competitiveness of local businesses, leading to factory closures and job losses. A study by the Alliance of Technological Companies Qaztech found that 20% of Kazakhstani consumers currently shop exclusively on foreign platforms. Without government intervention, this share could exceed 50% by 2029, resulting in substantial budgetary losses. “Pay Up or Leave” In January, Prime Minister Olzhas Bektenov proposed increasing VAT while reducing social tax and pension contributions for employers. The plan includes raising the basic VAT rate to 16%, though certain businesses may receive exemptions. In March, National Economy Minister Serik Zhumangarin confirmed that the VAT increase would also apply to online marketplaces. “We set rules and laws, and marketplaces must either comply or exit our market. As far as I know, Temu and Pinduoduo have already conditionally registered here and are VAT payers,” Zhumangarin stated. He emphasized that the government is not imposing a special tax on specific platforms but rather enforcing equal treatment across all e-commerce players. Zhumangarin acknowledged that the VAT hike might cause a short-term inflationary spike, estimating an additional 3% increase. Overall inflation, he noted, could return to double digits, reaching 12–14%. Uzbekistan Follows Suit Uzbekistan is also moving to curb foreign e-commerce dominance. Beginning March 20, the country will restrict access to Temu unless the platform registers for tax purposes. Authorities argue that some foreign marketplaces evade national tax regulations, creating unfair competition for local businesses. Uzbek analyst Timurmalik Elmuradov suggests that Temu has two options: establish a subsidiary in Uzbekistan or register as a VAT payer. The Chinese platform’s estimated monthly sales in Uzbekistan amount to $8-9 million. Online marketplaces are a relatively new phenomenon in Uzbekistan, with Temu operating in the country for only about six months. Should foreign e-commerce platforms withdraw, the cost of imported goods could rise by 10-12%. Meanwhile, Kazakhstan has around 50 domestic online marketplaces, though they struggle to compete with larger foreign rivals. While Chinese, Russian, and Western platforms offer a vast selection and lower prices, local businesses emphasize faster and more reliable delivery.

Tax Reform Special Tax Regime Ultimatum Tax

Kazakh Government Prepares for Battle with Big Business Over Tax

Kazakhstan's government is entering a critical phase of its tax system overhaul, which is set to conclude by Nauryz, the country’s most significant Turkic holiday, beginning on March 21. The deadline for the ultimatum issued by Prime Minister Olzhas Bektenov to major businesses, accused of exploiting tax loopholes, will expire in the second half of March. The question remains: What happens next? Tax Reform: Eliminating Preferences The government has been pushing for tax reform, aiming to abolish a range of tax benefits, some of which date back to 2008 during the global financial crisis. However, the main point of contention now is the Special Tax Regime (STR), a more recent initiative. The STR was introduced in 2021 as a response to the economic crisis caused by the COVID-19 pandemic. Today, 2.3 million taxpayers in Kazakhstan operate under this system, yet only 8% (137,000 entities) are value-added tax (VAT) payers. Additionally, 81% of registered entities use the simplified tax declaration regime, with 85% reporting annual incomes of up to 15 million KZT ($30,000). Ultimatum to Developers Following a report by Minister of Finance Madi Takiyev on tax evasion practices, Prime Minister Bektenov singled out two of Kazakhstan’s largest construction companies, BI Group and BAZIS, accusing them of using legal loopholes to avoid paying fair taxes. “Unscrupulous entrepreneurs are exploiting various tax optimization schemes and paying amounts that do not match their billion-dollar revenues. We have a full list of such companies, including major developers like BI Group, BAZIS, and others, as well as well known restaurant chains, fitness clubs, and businesses across multiple industries,” Bektenov said. He then issued a demand: companies must voluntarily submit revised tax declarations within two weeks and pay appropriate taxes. Shortly afterward, it was revealed that BI Group was ordered to pay 11.9 billion KZT ($23.8 million) in additional taxes, while BAZIS must pay 4.6 billion KZT ($9.2 million) for 2022 and 2023. Developers Deny Allegations In response, both companies denied the accusations. BAZIS stated that its subsidiary structure was created to comply with Kazakhstan’s equity participation laws, not for tax evasion. “This is a legal requirement under Kazakhstani legislation, and we fully comply with it,” the company said. BAZIS also emphasized that it is regularly monitored by tax authorities and expressed concern over Bektenov’s remarks. BI Group, for its part, insisted that its tax deductions are audited annually by both state bodies and independent international firms such as KPMG and Ernst & Young. “The company has been audited annually for the last 10 years by KPMG and Ernst & Young, and no violations have been found,” BI Group stated. Ties to the Government BI Group has had close ties to the Kazakh government. In 2020, the company was tasked with building modular hospitals during the COVID-19 crisis. However, in 2021, the project came under corruption investigation, though the company was ultimately cleared. BI Group’s owner, Aidyn Rakhimbayev, remains a highly influential businessman. He is ranked 11th on Forbes Kazakhstan’s list of the country’s wealthiest individuals,...

Tax Evasion Prime Minister Ultimatum Tax

Kazakhstan’s PM Bektenov Gives Major Construction Firms Tax Ultimatum

Kazakhstan’s Prime Minister, Olzhas Bektenov, has accused the country’s two largest construction companies, Bazis and BI Group, of tax evasion. The State Revenue Committee later substantiated these claims, notifying the firms of additional taxes amounting to KZT 16.5 billion (over $32 million). Business Fragmentation The allegations against the developers emerged during a meeting between Bektenov, National Economy Minister Serik Zhumangarin, and Finance Minister Madi Takiyev. Takiyev explained that many Kazakhstani businesses exploit legal loopholes by dividing their operations into multiple legal entities to minimize tax obligations. He cited examples from the hospitality industry, where bars, kitchens, and karaoke sections within a single venue are registered as separate businesses, or where each floor of a hotel is owned by different individual entrepreneurs. This practice enables businesses to evade value-added tax (VAT). Once a company’s revenue reaches the KZT 78 million ($155,500) VAT registration threshold, it ceases operations and is replaced by a new legal entity. “To reduce payroll taxes, businesses remove employees from their staff, register them as individual entrepreneurs, and then contract them as external service providers. This lowers tax liabilities, shifts social responsibility from the employer to the entrepreneur, and significantly reduces payroll tax contributions,” Takiyev explained. According to his figures, Kazakhstan currently has 2.3 million registered taxpayers, but only 8% (137,000) are VAT payers due to this loophole. Additionally, 81% of all businesses operate under a simplified tax regime, with 85% of them reporting an annual income below KZT 15 million ($29,900). “An analysis has shown that transactions between these tax schemes doubled over the past year, from KZT 5 trillion to KZT 10 trillion. In other words, while generating hundreds of billions in revenue, these businesses pay negligible taxes,” Takiyev stated. He noted that such schemes are prevalent not only in the service sector but also in real estate development. Final Warning Bektenov explicitly named companies under scrutiny. “We have a complete list of major businesses employing these tactics. Among them are well known construction giants such as BI Group and Bazis, as well as popular restaurants, fitness clubs, and other companies across various industries,” he said. Bektenov issued a two-week ultimatum for these businesses to settle their tax arrears. “If they fail to act, the government will use all available fiscal and law enforcement mechanisms. The conversation will be tough, but we are open to dialogue, if businesses are prepared to act fairly toward the state,” he warned. By the end of last week, tax authorities had formally notified Bazis and BI Group of their outstanding obligations. Bazis was instructed to correct tax filings for an undeclared KZT 4.6 billion ($9.2 million), while BI Group was found to have understated its taxable base and income by KZT 11.9 billion ($23.8 million). The companies have been given an opportunity to amend their tax reports and pay the additional amounts before formal inspections begin. So far, neither developer has publicly responded to the accusations. As previously reported by The Times of Central Asia, Kazakhstan is set to reform...

Economy VAT taxes Government Tax

Kazakhstan Announces Differentiated VAT Rates

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.