Increased Tax Legislation: Expected Expansion of the State Treasury
Fresh Take:
The upcoming changes to Kazakhstan's tax system are promising a significant shakeup, moving the country towards a mobilized development budget and fostering priority sectors. In an address to Parliament, Prime Minister Olzhas Bektenov shared these insights, hinting at the progress in implementing the President's orders for economic reforms.
Here's what's in store:
- The new Tax Code, set to take effect in 2026, comes with a series of reforms geared towards economic development. High earners may see a progressive individual income tax rate of 15% taking effect, while self-employed individuals under the standard taxation regime will face the same.
- A simplification of the tax system is on the cards, with the current seven special tax regimes condensing into three. This aims to ease administration, promote self-employment, and encourage nationwide entrepreneurship.
- Sector-specific corporate tax rates have been set, with manufacturing companies benefiting from a reduced rate of 10%, while agricultural producers enjoy preferential rates between 3% and 6%.
- Changes have been proposed in tax regulations for foreign investors. Dividends to non-resident shareholders in resident companies could attract a 5% withholding tax, while previous exemptions have been cut.
- To incentivize innovation and technological advancement, a 300% super deduction on research and development expenses has been planned.
The ultimate goal is clear: an equitable and effective tax system that aligns with Kazakhstan's growing economy. By implementing this new Tax Code, the government aims to generate more funds for the development budget, stimulate growth in key sectors like manufacturing and agriculture, and encourage innovation to drive the national economy forward.
- The government's implementation of the new Tax Code, slated for 2026, signifies a strategic move in Kazakhstan's finance industry, as it strives to align the tax system with the growing economy, thereby generating more funds for the development budget.
- The proposed simplification of the tax system, with the reduction of seven special tax regimes down to three, is expected to stimulate business growth, making it easier for self-employed individuals and nationwide entrepreneurs to thrive in the industry.
