Kazakhstan to exempt small businesses from VAT

In late January, the Ministry of National Economy proposed raising the VAT rate from 12% to 20% / Photo: Shutterstock

Kazakhstan’s cabinet weighs exempting small and micro-businesses from the value-added tax (VAT), Lada.kz reported, citing Vice Minister of National Economy Bauyrzhan Omarbekov.

This statement followed a meeting of Omarbekov with Mangystau region entrepreneurs where the two sides discussed the upcoming increase of VAT to 16%. In his speech, the minister stated that authorities intend to exempt small businesses from VAT.

«During his speech, Omarbekov emphasized that the government was considering the possibility of exempting small and micro-businesses from VAT to prevent price increases in groceries and socially important goods,» Lada.kz reported.

In late January, Kazakhstan’s Deputy Prime Minister Serik Zhumangarin stated that Kazakhstan’s VAT rate could be changed from 12% to 20%. At the time, he claimed that this measure would expand the country’s tax revenue by approximately $10 billion to $14 billion annually. However, he admitted that the measure could cause a 4.5% increase in inflation.

The initiative caused a real stir in Kazakhstani society. Later, President Kassym-Jomart Tokayev claimed that the VAT rate had been set too high, prompting the cabinet to revise the initial proposal and switch to differentiated rates ranging from 0% to 16%.