The Government of Kazakhstan has announced significant changes to the tax system, providing for a full exemption from VAT for agricultural producers.
This decision is part of a comprehensive tax reform, which introduces a differentiated approach to VAT for various sectors of the economy. The initiative aims to increase the competitiveness of domestic agricultural products and support the development of the agrarian sector.
On 10 February in Astana, a meeting took place between government representatives and the business community, where Finance Minister Madi Takiyev and Vice-Minister of National Economy Azamat Amrin presented a new tax concept.
More than 150 business representatives took part in the event, including members of various associations and industry bodies.
A key element of the proposed reform is the introduction of a three-tier VAT system: a basic rate of 16%, a reduced rate of 10% for certain sectors, and a full exemption for agricultural producers.
This approach represents a significant step forward compared to the current system, where peasant farms are exempt from VAT, and legal entities in the agricultural sector pay 30% of the established tax amount.
“The tax system must be balanced and take into account the interests of both business and the state”, Madi Takiyev emphasised, citing the directive of President Kassym-Jomart Tokayev. The Minister also noted that all proposals from the business community would be carefully considered during the refinement of the reform.
Special attention is being paid to the agricultural sector, where full exemption from VAT is intended to make Kazakh products more competitive in domestic and foreign markets. This applies to a wide range of goods, including staple food crops – potatoes, tomatoes, onions, and other types of agricultural produce.
The reform also provides for the modernisation of the simplified declaration regime and the retail tax. The maximum annual income threshold of 600,000 MCI (2 billion 359 million tenge) is retained, while restrictions on the number of employees are removed.
For enterprises with an annual income exceeding 100 million tenge, the possibility of reducing the taxable base by the amount of the wage fund is provided, which is intended to encourage the legalisation of wages.
According to government forecasts, the implementation of the tax reform will lead to an increase in tax revenues to the budget of 4-5 trillion tenge annually. These funds are planned to be used to reduce dependence on the National Fund, decrease public debt, and finance priority development projects.
It is worth recalling that initially, an option of raising VAT to 20% was considered, however, following an instruction from Kassym-Jomart Tokayev, the government developed a more flexible approach, taking into account the specifics of various sectors of the economy.