4% VAT increase to 16% 2026 proposal; new 10% reduced rate; and lower registration threshold
Kazakhstan’s government has proposed three major changes to the VAT regime in the Tax Code. The changes have now been submitted to Parliament:
- VAT standard rate rise from 12% to 16%;
- New 10% reduced rate for essentials; and
- Reduction in the VAT registration threshold from 78.6 million to 15 million sales per annum
The government hopes to implement the VAT reform by mid-2025 and formulate a budget for 2026.
Bektenov said: “The main tax burden falls on the wage fund and, therefore, on the cost of goods. Even before the product hits the shelf, entrepreneurs are forced to pay most of the taxes. By increasing the VAT rate, we can reduce the burden on the wage fund,” Bektenov explained. If implemented, these reforms could generate an estimated 5-7 trillion tenge in additional budget revenue, providing a significant boost to Kazakhstan’s public finances.
Initial approval and calls for further discussion
President Kassym-Jomart Tokayev has expressed support for the proposed VAT reforms but emphasized the importance of engaging in further discussions to ensure comprehensive understanding and alignment. His stance underscores the government’s commitment to balancing fiscal goals with the concerns of businesses and citizens.
The road ahead
While the government’s VAT reform proposals hold potential to strengthen Kazakhstan’s budget, they have sparked discussions about their impact on businesses and the broader economy. With a push for a lowered VAT registration threshold and debates over raising the VAT rate, Kazakhstan’s evolving tax policy remains a focal point for economic planning in 2025.
Stakeholders now await further clarification and deliberation as the government navigates these critical reforms.