On January 23, Prime Minister Olzhas Bektenov met with representatives of the expert community in the fields of economics and entrepreneurship. Many Kazakhstani experts, heads of various associations, economists, businesspeople, financiers, and others participated in the meeting.
The press service of the Prime Minister did not disclose details of this meeting, providing only "dry" information about the event. It was noted that "the participants discussed projects for the new Tax and Budget Codes, which include measures for stabilizing public finances and their effective use." According to the press service, the attendees "shared expert opinions" on the subject.
Major Reform
Forbes Kazakhstan reached out to participants of the event for comments, asking them to share their opinions with our publication. According to Almas Chukin, managing partner of the investment company Visor Kazakhstan, the main issues were related to the proposed amendments to the new codes.
— First of all, I would like to commend the government for finally recognizing the serious issues in the financial and budgetary sphere and taking action. At the same time, I would criticize them for the fact that I have been shouting, banging on the table, and saying that something needs to be done for the last three years, that our budget's revenues do not match expenses, which is wrong and unfair to constantly feed the budget from the National Fund. So I want to say: the fact that this meeting took place is already very important in itself. This can be seen as a real course correction and the beginning of reforms, — said Almas Chukin.
According to the economist, the budget deficit is indeed quite significant. He reported that expenditures are planned at 25 trillion tenge for 2025, while tax revenues are expected to be around 15-16 trillion. "Imagine, a 9-10 trillion tenge deficit. That’s a lot," — calculated the economist. Therefore, Almas Chukin identified the most important topic for the meeting of experts in the government as the increase of taxes, particularly raising the VAT from 12% to 20%.
— In general, seven or eight different major changes were discussed, but the most important one that stands out is the increase of VAT to 20%. Representatives from various associations participated in the meeting, explaining how this increase might affect their industries, with some requesting exemptions. I didn’t get a chance to share my opinion; my turn didn’t come, — laments Almas Chukin, adding that he certainly has something to say on this matter. — My opinion is that the situation in the country is complicated, and we shouldn’t get carried away with any exemptions right now. We need to live within our means.
Chukin explains that "living within our means" can be achieved in three ways: first — increasing revenues, second — cutting expenses, and third — rapidly accelerating economic growth so that this growing economy generates more taxes. However, the economist clarifies that the third option is "currently unrealistic." The second option is also quite dubious since reducing expenses is challenging: 70% of the Kazakh budget consists of social payments. "We can’t just cut salaries for civil servants or reduce pensions for retirees!" — exclaims the economist.
Therefore, in Chukin's opinion, the current "number one task is to ensure balance." And for that, it is necessary to "find at least 5-6 trillion tenge somewhere."
— How to find them? Our budget relies on three "pillars": VAT, individual income tax (IIT), and corporate income tax (CIT). I believe raising IIT is harmful: it won't generate revenue. It's like shearing a pig — there’s a lot of squealing, but little wool. CIT also cannot be raised because it is the main resource for enterprise development, and primarily all earned money is directed toward further development rather than dividends. However, VAT, from an economic standpoint, is not particularly harmful. But it is very unpleasant for the population, — says Almas Chukin.
The government understands that such a measure will significantly affect consumers' wallets since this tax is ultimately paid by consumers. With this measure, new goods will require an additional 20% VAT instead of the previous 12%. "It's significant, but it needs to be done for the sake of the economy; it's the right measure that will genuinely help close the budget gaps," — explains Chukin.
— This money will return to the economy through the budget. And the government will be able to fulfill its functions. First — caring for the socially vulnerable. Second — various social aspects, schools, hospitals, defense, and so on. And this measure has the least harmful effect on overall economic development, — the economist is confident.
At the same time, the government plans to offset the VAT increase by reducing the burden on the wage fund and abolishing the social tax, which could "sweeten the bitter pill."
By the way, the new Tax Code must be adopted no later than January 1, 2026. However, according to Chukin’s data, this could happen even earlier. This issue was also discussed at a government meeting.
— Such important decisions need to be made faster. Because as long as they drag it out, all business projects are frozen, as neither businesspeople nor investors understand what will happen next. Therefore, it was suggested to adopt this bill not from January 1, 2026, but as early as October 2025, — reported the economist. — I agree with this because the economy needs to prepare for such a significant restructuring. Accountants, businesspeople, financiers, and economists need at least six months to calculate how we will live moving forward. The entire economic base is changing, and prices for everything will change. This is no trivial matter; it's truly a major reform, — concluded Chukin.
Step-by-Step Work
Managing partner of Dasco Consulting Group, Darmen Sadvakassov, reported that the majority of experts supported the necessity of tax increases for balancing the state budget, which "as we know, is in a crisis situation." Darmen clarified that in Kazakhstan, compared to various countries, the VAT is among the lowest. For instance, VAT is 27% in Hungary, 25% in Denmark, 20% in Russia and Ukraine, and 19% in Germany, etc.
— Given the budget deficit that is observed and the challenges reported today by the Minister of National Economy, which will persist in the coming years, the government simply won't have the means to support the infrastructure of the state. And we already see that infrastructure issues are present across the country, but there are no resources to address these problems. Considering that the government plans structural reforms, modernization of infrastructure, and so on, we supported the initiative to raise taxes in this regard, — said Darmen Sadvakassov.
He specified that despite the experts' agreement with this norm, it makes sense to consider a phased increase of VAT rather than raising it immediately by 8%, as the government proposes. "This is probably our main proposal at the moment," — clarified Sadvakassov.
Another proposal voiced by Darmen includes supporting medical insurance through the tax system. "There were also calls to raise taxes on the gambling business and to generally enhance so-called 'tax morality,'" — concluded the interlocutor.
Conversation with Business
Chairman of the Board of the corporate fund NAC Analytica, financial analyst Rasul Rysmambetov also agrees with his colleagues on the need to raise VAT and change the tax reality.
— In Kazakhstan, the development budget is too small, allocated for the construction of new infrastructure projects, improving socially significant areas, and financing businesses. In other countries, this development budget is at the level of 20-25%, while ours is only 6%. It needs to be increased, but without depleting the National Fund, — believes Rysmambetov.
The expert also notes another important thesis that was discussed at the meeting — the reduction of special tax regimes.
— Currently, "legal tax havens" are being created in Kazakhstan, where two identical companies operate, but one pays taxes under a "simplified" regime at 3%, while the other pays 20% CIT. This happens because companies with turnovers in the tens of billions of tenge split into parts, thereby reducing their tax burden, — explains Rysmambetov. — This is quite irresponsible since such "split" companies minimize their tax burden by at least 20-30%. In this regard, a number of amendments were proposed so that taxes are paid fairly by all.
Rysmambetov believes it