taxes - The Times Of Central Asia

Viewing results 1 - 6 of 21

Corruption Youth Entrepreneurship taxes Business Climate

Kazakhstan’s Youth Face Barriers to Entrepreneurship

A recent analysis by the analytical portal Ranking.kz reveals a concerning stagnation in youth entrepreneurship in Kazakhstan. Despite government rhetoric promoting innovation and small business, the number of young individual entrepreneurs has remained nearly flat over the past two years. Youth Entrepreneurship by the Numbers As of the end of Q1 2025, Kazakhstan recorded 736,100 individual entrepreneurs (IE) under the age of 35. Of these, 698,900 are active. The growth rate over two years is just 0.2%, signaling stagnation rather than progress. The decline in young entrepreneurs' share of the total business landscape underscores this trend. In 2023, they made up 50.9% of all active IEs; by 2025, that figure dropped to 47.3%. According to the National Statistics Bureau, today’s young entrepreneur in Kazakhstan is more likely to be a woman (55.4%) than a man (44.6%). Urban residents dominate the demographic, comprising about 75.3% of the total, while rural entrepreneurs represent only 24.7%. Sectoral Growth and Decline Trade remains the leading sector for young entrepreneurs, employing 303,300 individuals, though it saw no growth over the past year. The most significant expansion occurred in transportation and logistics, which grew by 90.1% to 49,700 entrepreneurs. Construction also showed positive movement, with a 10.7% increase, totaling 21,000 entrepreneurs. In contrast, other sectors experienced contraction: agriculture dropped by 25.1%, manufacturing by 11.9%, and real estate by 2.8%. These declines suggest a shift away from traditionally accessible sectors for new entrepreneurs. Geographically, growth was concentrated in major urban centers. Almaty leads with 121,200 active young entrepreneurs, followed by Astana (89,500) and Shymkent (62,100). Modest gains were also observed in the Almaty, Kostanay, Pavlodar, and North Kazakhstan regions. The Ulytau region registered the lowest number, with just 6,700 young individual entrepreneurs. Barriers to Growth The Atameken National Chamber of Entrepreneurs' 2024 "Business Climate" rating provides insight into regional variations in the ease of doing business. Entrepreneurs in Shymkent, Kyzylorda, and Ulytau reported the most favorable conditions. Conversely, Astana, Pavlodar, and North Kazakhstan ranked lowest. Key challenges cited by entrepreneurs include: High tax burdens (44% of respondents) Excessive bureaucracy and a complex licensing system (43.1%) Frequent inspections by regulatory authorities (42.4%) Corruption, especially in land allocation and public procurement These issues are reflected in the National Bank's 2025 Q1 business sentiment survey, where 31.4% of respondents cited taxes as the primary obstacle, while 30% pointed to broader economic conditions and high competition. Despite a vibrant and youthful potential workforce, Kazakhstan’s business environment continues to present structural challenges that deter innovation and sustainable growth. Addressing these barriers will be critical if the country is to harness its demographic dividend and support the next generation of entrepreneurs.

Tax Digitalization taxes QR Code System QR Code Mandatory QR Code Tax Payment

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.

Proposal WHO taxes Tobacco

Kyrgyz Health Minister Proposes Raising Tobacco Taxes to Curb Smoking

Kyrgyzstan’s Minister of Health, Erkin Checheybayev, has proposed raising excise taxes on tobacco products as part of a broader effort to improve public health, particularly among the country’s youth. The proposal was announced at a meeting held on June 10 in Bishkek, organized by the Ministry of Health in partnership with the World Health Organization (WHO) country office and the WHO Framework Convention on Tobacco Control (FCTC) Knowledge Hub on Tobacco Taxation. The discussion focused on strategies to reduce tobacco affordability and consumption through effective taxation measures. According to the Ministry of Health, tobacco use is a leading risk factor for non-communicable diseases (NCDs) such as heart disease, stroke, chronic respiratory illnesses, and cancer. These diseases account for more than 80% of premature deaths in Kyrgyzstan. WHO estimates indicate that more than 6,000 Kyrgyz citizens aged 30 and older die annually from tobacco-related illnesses, around 5,000 men and 1,000 women. Cardiovascular diseases make up over half of these deaths. The economic toll from tobacco-related cardiovascular conditions exceeds 17 billion Kyrgyzstani som (approximately $194 million). Roughly 22% of adults in Kyrgyzstan smoke, including one in two men. Among individuals aged 35-69, up to 30% of men and 5% of women die from tobacco-related causes. For these age groups, smoking reduces life expectancy by an average of 21 years. Despite the public health burden, Kyrgyzstan’s current tobacco excise tax remains below 50% of the retail price of cigarettes, significantly lower than the WHO-recommended threshold of 75% or more. According to WHO research, taxation is among the most effective tools for reducing tobacco use. A 10% increase in cigarette prices can lower smoking rates among children and adolescents by approximately 8% in developing countries. On June 9, a delegation from the WHO FCTC Knowledge Hub met with Checheybayev in Bishkek to present the TETSiM simulation model, an analytical tool demonstrating how raising excise taxes can both reduce tobacco consumption and increase government revenue. The mission will remain in Kyrgyzstan until June 12, providing technical support for developing an effective tobacco taxation policy, increasing public awareness, and building support for stronger tobacco control measures. “Raising excise taxes on tobacco products is one of the most effective and scientifically validated strategies for protecting public health,” Checheybayev stated. “Tobacco remains far too affordable in Kyrgyzstan, contributing directly to the rise of non-communicable diseases. We are committed to systemic reform and look forward to the continued support of international partners.” Meeting participants agreed that a higher tobacco tax would not only yield billions in savings for the national healthcare system but also represent a critical investment in the health and future of Kyrgyzstan’s population. Reforming tobacco taxation policy could position Kyrgyzstan as a regional leader in the fight against smoking, setting an example for other Central Asian nations.

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...

taxes VAT Government Tax Economy

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.

State Budget Government Budget taxes

Kazakhstan Explores Budget Cuts and Tax Reforms with Input from Elon Musk

Kazakhstan is exploring ways to optimize its state budget, drawing inspiration from recent U.S. reforms. Deputy Prime Minister and Minister of National Economy Serik Zhumangarin revealed that Elon Musk, head of the newly established U.S. Department of Government Efficiency (DOGE), has offered assistance in implementing similar measures in Kazakhstan. According to Zhumangarin, Musk proposed helping the government identify potential cost-cutting areas, though he acknowledged that reducing social expenditures would be challenging. He welcomed Musk’s input, suggesting the formation of a working group to assess possible savings while ensuring that cuts do not negatively impact ordinary citizens. The discussion on budget efficiency comes as Kazakhstan prepares for tax reforms, including raising the value-added tax (VAT) from 12% to a proposed 16-20% and lowering the revenue threshold for VAT registration from 78 million KZT to 15 million KZT ($150,000 to $29,000). Officials estimate the changes could generate an additional 5-7 trillion KZT in revenue. However, the proposed reforms have met resistance. A petition argues that lowering the VAT threshold will disproportionately burden small and medium-sized enterprises (SMEs), forcing them to hire additional staff and leading to price increases. Some lawmakers have also warned that raising the VAT rate could drive inflation higher. Senate Speaker Maulen Ashimbayev has urged the government to reassess budget efficiency before implementing tax hikes, pointing to the U.S. model, where the Department of Government Efficiency is working to cut wasteful spending. While he does not advocate blindly following the U.S. approach, Ashimbayev believes Kazakhstan should consider similar measures as it debates tax increases and fiscal responsibility. As previously reported, Kazakhstan’s Ministry of National Economy had proposed reducing the number of taxes in the country by 21% a year ago.