Real estate expert reveals what will happen to housing prices after VAT increases

According to Viktoria Ten, vice president of the Association of Kazakhstan’s Developers (AZK), if the value-added tax (VAT) is raised from 12% to 16% and developers lose their VAT exemption, housing prices will increase by 14%.

Speaking at the Krysha Novostroiki conference, the expert also discussed the so-called social infrastructure payment, which requires developers to contribute to upgrading municipal infrastructure. The payment amount will depend on the floor size of the buildings a developer puts up for sale.

«All in all, the tax rate increase and the removal of tax benefits for developers will lead to a 14% rise in real estate prices. This is not just my opinion; many experts predict the same. Regarding the social infrastructure payment, it will also increase the financial burden on developers to some degree. If combined, these two factors are a bombshell for the market,» Ten stated.

She also believes that to avoid worse scenarios, all interested parties must engage in discussions. For this reason, Ten is hopeful that authorities and members of parliament will listen to developers’ concerns.

Kazakhstani developers have been exempt from VAT since 2001. However, a new version of the Tax Code proposes eliminating this benefit. Furthermore, the VAT rate is expected to rise to 16%, although for some categories of goods, it will remain at 0% and 10%. Farmers and agricultural holdings, for example, will continue to be exempt from the tax.