Better tax administration could boost revenue without resorting to VAT hike in Kazakhstan - Halyk Bank
ASTANA. Feb 20 (Interfax) - Kazakhstan could boost tax revenue by improving tax administration rather than increasing the current 12% VAT rate, said Umut Shayakhmetova, head of Halyk Bank, the country's biggest lender.
"Even with the current 12% VAT rate, more taxes can be collected into the state budget with proper administration," Shayakhmetova said at the Women in Business forum in Almaty.
She said that addressing tax evasion, such as individuals registering multiple businesses, could help broaden the tax base.
"For instance, one person could be registered with 58 individual businesses, each generating a turnover of 1 billion tenge. Such practices need to be stopped, and effective administration should be enforced. This would help expand the tax base and improve collection," she said.
Shayakhmetova also pointed out challenges related to customs duties and the unfair competition between compliant businesses and those operating informally.
"We hear complaints from our clients, corporate entities, that those who operate 'above board' are now facing much tougher competition from companies and individuals working 'under the radar,'" she said.
Tatiana Proskuryakova, the World Bank's Regional Director for Central Asia, said the same. "it's not just a question of the tax rate, but how fairly it is applied," she said.
Kazakhstan is considering raising the VAT rate from the current 12%. The initial plan was to raise VAT to 16% in 2023 and to 20% in early 2025, while reducing the burden on payrolls, which caused concern in the Kazakh business community.
On February 7, Kazakh President Kassym-Jomart Tokayev suggested that the VAT rate be differentiated, saying the 20% rate proposed by the government was too high.
The government later proposed a basic VAT rate of 16%, a preferential rate of 10% for a number of industries, and a zero rate and total exemption from VAT, particularly for agricultural producers.
A new tax code proposal is expected by February 20, 2025.