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Economy

Most Kazakhstani Citizens Fear Decline in Living Standards Due to Tax Reform

A majority of Kazakhstanis expect a planned increase in value-added tax (VAT) to negatively impact their standard of living, triggering higher prices, rising unemployment, and increased pressure on businesses, according to a survey conducted by the DEMOSCOPE public opinion monitoring agency. The results show that 61.4% of respondents believe the VAT hike from 12% to 16% beginning January 1, 2026, will reduce their quality of life. Of those, 32.4% anticipate a significant decline, while 29% expect a slight deterioration. Meanwhile, 20.6% believe the change will have no impact, and just 9% believe it will improve their living standards. Government officials have framed the VAT increase as necessary to boost budget revenues, stabilize the economy, and finance social spending. However, respondents overwhelmingly believe the reform will primarily benefit the state (63.8%) and wealthy citizens (27.9%). In contrast, only 10.2% think businesses will benefit, while 3.3% expect gains for the middle class and just 2% for low-income citizens. Additionally, 19.2% said no one would benefit, and 2.4% believe everyone will benefit. Respondents also identified several expected negative outcomes. A majority, 65.5%, expect a rise in prices for goods and services. Another 27.3% predict a reduction in the number of small and medium-sized enterprises, 26.5% foresee rising unemployment, and 19.6% anticipate growth in the shadow economy and tax evasion. Among entrepreneurs, 70.5% view the reform negatively. The VAT hike is seen as particularly detrimental to small and medium-sized businesses: 63.6% believe it will harm the sector, 14.8% foresee no impact, and only 10.3% predict a positive outcome. Overall, 52.8% of respondents expressed a negative view of the reform, while 33.4% were neutral and just 7.8% were positive. Nevertheless, some respondents did see potential benefits: 18.2% believe the reform will increase tax revenues, and 9.4% think it will improve living standards. A further 12.6% said they expect no significant changes. The findings suggest that many Kazakhstani citizens view the tax reform as a policy that favors the government and affluent elites, while placing disproportionate pressure on businesses and vulnerable population groups. As previously reported by The Times of Central Asia, in early October, Finance Minister Mady Takiev stated that authorities had identified suspected underreporting of taxable income by more than 260,000 businesses across the country.

Marketplace

Kazakhstan to Block Foreign Marketplaces for Unpaid Taxes

Foreign online platforms that do not complete conditional VAT registration and begin paying taxes in Kazakhstan by January 1, 2026, will be blocked in the country, according to Edil Azimshayyk, head of the VAT Administration Department at the State Revenue Committee under the Ministry of Finance. Speaking at a briefing in Astana, Azimshayyk said a new mechanism, conditional VAT registration for foreign companies, will take effect at the beginning of 2026. Under this system, the tax authorities will create a registry of foreign companies liable for VAT. The new rules will primarily target foreign suppliers of goods, services, and works that operate in Kazakhstan’s digital marketplace. To register, a foreign company must submit a confirmation letter containing its corporate details to Kazakhstan’s tax authority within one month of receiving its first payment from a buyer in Kazakhstan. The date of this initial payment will determine when the company is recognized as a VAT payer. Once registered, these companies will be required to pay VAT on a monthly basis. “We will send them notifications requiring registration,” Azimshayyk stated. “However, blocking their banking operations is not applicable, as they do not open accounts in Kazakhstan. Instead, if they fail to comply with the registration notification, access to their online platforms will be suspended.” The State Revenue Committee, in cooperation with the National Bank and commercial banks, will identify non-compliant companies by analyzing payments made by Kazakhstani citizens to foreign marketplaces. The VAT rate for such foreign platforms will also increase from 12% to 16% starting in 2026. Kazakh companies that are not yet registered for VAT will likewise receive notifications and be given 30 working days to comply. “If the notification is ignored, expenditure transactions on the taxpayer's bank accounts will be suspended. This restriction will be lifted once the company completes registration,” Azimshayyk added. As previously reported by The Times of Central Asia, foreign online purchases in Kazakhstan totaled $1.3 billion in 2023, representing approximately 20% of the country’s total online sales. Overall e-commerce volume exceeded $4.8 billion, accounting for 13% of total retail trade. The Kazakh government aims to raise the share of e-commerce in total retail trade to 18.5% by 2029 and 20% by 2030.

Entrepreneurship

Kazakhstan’s Finance Ministry Cracks Down on Widespread Tax Evasion Among Small Businesses

Kazakhstan’s Ministry of Finance has identified more than 260,000 entrepreneurs suspected of underreporting taxable income, Finance Minister Madi Takiyev said during a recent government meeting. According to Takiyev, in 2024, around 17,000 cash registers across the country failed to issue any receipts, while 260,000 taxpayers consistently reported either a single daily transaction or identical revenue amounts. However, enforcement efforts appear to be paying off, with 70,000 businesses now issuing receipts properly. The minister noted that tax evasion schemes remain widespread, including the mass registration of multiple companies at the same address. Currently, around 20,000 firms are registered at 3,576 locations, collectively owing over 60 billion KZT ($110 million) in unpaid taxes. Takiyev reported that the shadow economy declined slightly in 2024, accounting for 16.7% of GDP, a marginal improvement from the previous year. He highlighted notable progress in trade, education, and agriculture, supported by new digital tools such as Smart Data Finance, which uses artificial intelligence to detect tax evasion. The system currently integrates data from 74 sources, with 30 more expected to be added by the end of the year. Biometric identification has also played a role in strengthening compliance, helping authorities block fake invoices worth over 33 billion KZT ($60 million). Meanwhile, the E-Tamga system has processed 250 million electronic invoices and 500 million payments, potentially adding up to 100 billion KZT ($182 million) in annual tax revenue. To combat illicit trade, the authorities seized more than 1 million liters of alcohol, 6.6 million cigarette packs, and 37,000 tons of petroleum products in 2024, preventing estimated tax losses of over 7 billion KZT ($12.7 million). As The Times of Central Asia previously reported, Kazakhstan’s new Tax Code, raising the value-added tax (VAT) from 12% to 16%, is set to take effect in 2025.

Automotive Industry

Kazakhstan’s Tax Cut on Old Vehicles Sparks Debate

Kazakhstan will implement an updated Tax Code beginning January 1, 2026, following its signing on July 18. Among the most debated changes is the revision of the transport tax for vehicles over 10 years old. Under the new code, owners of cars aged 11 to 20 years will receive a 30% tax discount, while those with vehicles older than 21 years will benefit from a 50% reduction. The decision stands in contrast to recent trends of increasing the overall tax burden. Yet experts warn that behind the populist optics lie significant environmental and road safety risks. A Political Gesture Ahead of Elections? Tax consultant Aidar Masatbaev views the reform as more political than economic in nature. “People complained that the tax on old cars was too high. Apparently, the advocates of a softer tax policy prevailed,” he said in an interview with inbusiness.kz. Masatbaev added that the measure is unlikely to meaningfully reduce the cost of car ownership. Instead, factors like rising fuel prices and declining real incomes play a more critical role. “The problem is that most people cannot afford to buy a new car,” he noted. Technical and Environmental Risks According to official statistics, more than 80% of Kazakhstan’s vehicle fleet comprises cars over 10 years old. Of these, over 2.2 million vehicles are more than 20 years old. These aging cars not only lag in efficiency but also pose serious safety risks. “Old cars are becoming a source of increased danger. Their consumables are more expensive, and the desire to save on repairs leads to risks on the roads,” Masatbaev warned. He cautioned that offering tax incentives could further entrench the use of obsolete, potentially unsafe vehicles. Additionally, the secondary car market lacks transparency. Many transactions go unregistered, reducing the effectiveness of fiscal measures and minimizing the impact of tax relief on state revenues. Masatbaev also questioned proposals to increase taxes on old vehicles, arguing that such moves would only heighten public dissatisfaction and strain the tax system. He recommended automating debt collection to improve efficiency, but acknowledged this could erode public trust in the tax authority. Kazakhstan’s Aging Car Fleet, by the Numbers According to Ranking.kz, in May 2025, Kazakhstan had 5.34 million registered passenger vehicles, an 11.4% increase from the previous year. Two-thirds, approximately 3.54 million cars, were more than 10 years old. While the share of aging vehicles has slightly declined (from 70.3% in April 2023 to 68.3% in April 2024), the number of cars aged 10-20 years rose 12.4% to 1.27 million. Vehicles over 20 years old now number 2.27 million, a 5.7% increase. The highest concentrations of old cars are found in the Almaty region (449,600), Almaty city (355,200), Karaganda (237,300), Zhambyl (236,200), Turkestan (235,000), and East Kazakhstan (220,100). Zhambyl holds the highest percentage of cars over 10 years old at 83%, followed by Zhetysu (79.3%) and Almaty (78.4%). While tax breaks may offer temporary relief to car owners, analysts argue that without a comprehensive strategy for renewing the vehicle fleet, promoting...

Entrepreneurship

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.

QR Code

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.