State initiates tax overhaul, eliminating two economic structures - financial analyst viewpoint
Off the Cuff: Almas Chukin's Tax Talk, Unveiled
Prepare yourself, entrepreneurs of Kazakhstan, because change is coming, and it could be as soon as this autumn, according to renowned economist Almas Chukin. Talking at the CFO SUMMIT XII in Almaty, Almas dropped a bombshell, leaving everyone buzzing.
"If a decision on VAT gets the green light, the government plans to implement it from October 1. Call it October Surprise, perhaps?" he mused. Plus, check your stockpiles, folks, because everyone will rush to buy ahead of price hikes, and retailers better get ready for a massive, artificial economic boom.
Chukin also laid it on the line for businesses, saying, "Tax hikes are inevitable, so embrace the change." But, he urged conference attendees to shift their focus from the hike in VAT at 16%, IPT on incomes above 3 million tenge at 15%, towards the broader picture.
Small businesses in Kazakhstan rely heavily on the simplified tax regime, a legal loophole enjoyed by larger corporations too. Yet, this has weakened the value-added tax (VAT) base, which is crucial as a chain tax for creating added value, Almas explained. As a result, he posed the dilemma: How often do you struggle to find a supplier with an electronic invoice? A confirmation that up to 70% of professional participants work in the simplified regime, which does not issue such documents, added substance to his point.
Cutting through the complications, Almas stressed that the threshold for the usual simplified system would now be lowered to 15 million tenge, transforming it into a "super-micro-business."
So, what's next, you ask? Well, lowering the VAT threshold will force approximately 200-300 thousand entrepreneurs to register under VAT, whereas the country still clings to a retail tax with a high threshold. Yet, the OKED is reduced from 300 to 40, making way for a new management system.
Feeling the naysayers creeping in, Almas shrugged off the doomsday talk of mass bankruptcies. "Business is like a Phoenix, rising from its ashes. It's not the system, but the business folk who buckle under pressure," he confidently stated. However, he did raise a concern about the government pushing businesses towards "tax schemes," which can lead to shady practices.
The nation's Minister of Economy and Financial Planning, Serik Zhumanazarov, confirmed the new Tax Code might kick in as early as January 1, 2026, and the outcomes would be evident by March. He also rebuffed claims that increased tax rates would stifle businesses, stating that only 1.8 million — or 85% — of entrepreneurs working under the simplified regime have more than 15 million tenge.
In summary, the hammer might soon drop on businesses in Kazakhstan, but it could lead to a surge in alcohol sales, as everyone prepares for taxes' utopia or dystopia, or both! And hey, if Almas's words ring true, business keeps on humming like an unstoppable, economic bee, even amidst grinding gears and tumultuous times.
Finance and business owners in Kazakhstan should be prepared for the implementation of Value-Added Tax (VAT) from October 1, as suggested by Almas Chukin. Moreover, businesses should also brace themselves for a shift from the current simplified tax regime, as the threshold for it will be lowered, potentially affecting around 200-300 thousand entrepreneurs.
