On Thursday, February 20, 2025, the Chairperson of Halyk Bank, Umut Shayaqmetova, speaking at the Women In Business forum, shared her views on the proposed increase of VAT from the current 12%, which is under discussion in Kazakhstan, as well as on the corporate profit tax rate for banks, customs issues, and the likelihood of the "new" U.S. president lifting sanctions against Russia.
Shayaqmetova stated that she cannot speak for the entire market (the moderator posed the question regarding what the banking community thinks about a potential VAT increase), but she has discussed this matter with her colleagues. In her opinion, even if the VAT rate remains at 12%, by "properly expanding administration," it is possible to "collect more taxes for the state budget." "For instance, we observe that business fragmentation is occurring, where one individual may have [registered] 58 individual entrepreneurs, with each having a turnover of one billion tenge. This used to be a limited liability partnership; now we see fragmentation. Such practices need to be curtailed, and proper administration is necessary, which would then expand the tax base for collection," said the speaker.
The second major issue, according to her, is customs payments and duties. "Currently, we see a significant shortfall in customs duties. The gray economy is expanding, with a very large turnover of gray goods," Shayaqmetova remarked, clarifying that this, in her view, is more related to "our administration at the border" than to any "military factor." — Moreover, we see that it's not just consumer goods; raw materials are also being delivered in large volumes and flows. We hear complaints from our clients, corporate entities, about how much harder it is for those operating transparently to compete with companies or individuals who operate in the gray area.
However, in Shayaqmetova's opinion, if we are generally talking about a decline in [revenues] from corporate profit tax and VAT in the state budget, then "certainly, it is possible to approach the increase in VAT rates, but in a differentiated manner." "Although we see that in Uzbekistan the VAT rate is 12%, in Russia it ranges from 18% to 20%, and in Malaysia it is 6%," the banker stated. "Nevertheless, it seems that we need to strengthen tax administration and pay attention to 'gray' imports." (…) It turns out that those who are currently paying transparently will continue to pay more transparently. And those who slip into the gray area, I fear, will see their base only increase. (…) But besides revenues, expenses are also very important. Within the framework of the state budget, it seems to me that attention should be paid to the expenditure side. And I am convinced that there is also room for action to reduce expenses."
Regarding the increase in the corporate profit tax rate for certain sectors and the tax on income derived from investments in government securities (GKS), the head of Halyk Bank expressed the following position: "There is definitely a strong solidarity across the banking sector that it is unfair, and generally, in [other] countries, it does not happen that the corporate profit tax is set differently for one industry compared to another. That is, as a rule, the corporate income tax is uniform across all sectors. And the fact that banks are equated with bookmakers and casinos is complete nonsense. All our external consultants and auditors are also astonished by this framing of the question."
Shayaqmetova believes that this reflects "a small envy toward the banking sector," as banks are currently generating good revenues and the net profit is "indeed high." "However, it is necessary to delve deeper into the issue of return on capital. There are banks with a return on capital reaching 80%. Typically, these are banks that invest their assets either in securities or in consumer loans. Then there are banks where the return on capital is 24-26%. The second point is that yes, indeed, the last two years have seen high rates globally, and of course, there has been an additional margin for banks investing in securities. But we see that the trend is already moving towards a decrease. I still hope that rates will decrease. Plus, the funding base has grown. When rates rise, deposit rates increase as well. We see that margins are declining. I believe there should be fair and uniform regulation for all," the banker shared, adding: "Banks are probably more transparent, which makes it easier to tax them. And there is a feeling that those who pay will be taxed even more."
The moderator asked whether the coming to power of Donald Trump in the U.S. would reduce sanctions pressure. "I very much hope that there will be a thaw, that the war will end (...) But sanctions won't be lifted quickly; it's not a swift matter. Today we see that America seems ready for some positive steps, but Europe is taking a rather tough stance. Even if the Americans lift sanctions, but the Europeans do not, we, as bankers, will still be unable to carry out certain transactions, specific payments, and financing of those goods, sectors, and companies that are under sanctions. Sanctions are a significant problem, especially for Kazakhstan, because, as we know, our largest trading partner is Russia, and we have an open border. We see that many Kazakhstani companies are suffering because they cannot make payments or deliver products to Russia since many goods, especially in the industrial sector, have been sanctioned. And of course, this severely impacts our Kazakhstani producers and our economy."
The speaker added that for banks, the issue is not even about the risks of secondary sanctions, but rather that if a [foreign] correspondent bank closes their account, it is "de facto already a sanction," as it would be impossible to conduct any external payment. "After all, our economy is global, and payments in dollars and euros occupy a significant share. If even one international bank closes a correspondent account for a bank, that is de facto already secondary sanctions. For Halyk Bank, this is very critical. We have the largest number of correspondent accounts. The currency turnover and payments of the country go through Halyk Bank," concluded Shayaqmetova.