Vladimir Fesenko, a partner of EY, has commented on the peculiarities of a universal declaration system that has been introduced in Kazakhstan. During his speech at a tax summit by Freedom Finance, he talked about differences between the Kazakhstani system and its international equivalents and said that the new system would require significant effort from the country’s citizens.
«Our colleagues from the State Revenue Committee say that many foreign countries have already introduced universal income tax declaration. Unfortunately, or fortunately, that’s not true. Let’s define what is the universal income tax declaration in the first place. In my opinion, the system Kazakhstan is introducing is the first of its kind in the world. We are the pioneers in this field and we can be proud of this,» Fesenko said.
To make a comparison, the expert cited American legislation. In the United States, employers deduct income taxes from their employees’ wages (residents). However, because of progressive taxation, the sum of the deduction is often unclear and provisional. Taxpayers happen to know their final liabilities before the government only at the end of a year when they file their annual declarations. Sometimes, this final sum might be smaller than the sum of various deductions already paid to the federal budget. According to Fesenko, many Americans file their declarations to obtain tax deductions. In contrast, Kazakhstan’s government has been reducing the number of deductions (or adjustments as they are called in the law) and benefits. President Kassym-Jomart Tokayev demanded that the cabinet make these changes during his address to the nation last year.
«The second issue is that the universal declaration in Kazakhstan sees no difference between entities and individuals. This is a unique feature of the system. As a result, we all will be required, let’s say, to show our annual budget and watch our spending. You won’t find such total monitoring anywhere else in the world. I think it’s safe to say that some people are concerned because they have no experience with this,» the lawyer said.
The expert also pointed out differences and contradictions in the process of filing and applying for a declaration. Those who file several types of declarations simultaneously such as 240.00 (designed for owners of real estate and assets abroad) and 250.00 (related to assets and liabilities of individuals). Many types of properties fit well into both taxation forms which can cause big problems for those who must file declarations already starting this year.
The universal income tax declaration was introduced in Kazakhstan in 2021. The process was split into several stages to cover step by step different groups of taxpayers. Last year, the universal declaration became compulsory for employees of public agencies and quasi-public organizations and members of their families. Starting this year, it is mandatory for businessmen including individual entrepreneurs and top executives of companies. Next year, the income declaration will cover all other categories of the country’s population.
The government has also introduced control over mobile money transfers. Starting this year, anyone who receives more than 100 transfers from different people per month will be subject to examination by tax agencies. Authorities want these people to register as individual entrepreneurs if they are doing business and receive income without any formal registration. Starting next year, the government will penalize these violations with fines.
