"New tax code assures peaceful slumber according to Vice Prime Minister"
In a significant move, President Kassym-Jomart Tokayev signed the new Tax Code and amendments on taxation into law on July 18, 2025. The reform aims to stimulate business growth and reduce the shadow economy through a range of modernising measures.
The Tax Code introduces digital tools to ease tax calculation and payment, allowing self-employed individuals to pay taxes via a mobile app. This move encourages formal tax compliance, reducing informal activities. The reform also simplifies special tax regimes, streamlining them from seven to three, targeting self-employed individuals, simplified declarations, and peasant or farm households. This step reduces administrative burden and makes tax compliance more transparent and accessible.
One of the key changes is the abolition of the single land tax, replaced by income tax on gross income for peasant households. This move aims to better align tax obligations with actual economic activities, discouraging tax evasion in land use. Increasing penalties and tax rates for misuse or non-use of agricultural land seeks to enforce lawful land use and reduce evasion, a contributor to shadow economy.
The Tax Code also introduces differentiated income tax rates, including a 15% income tax for high earners and additional excise duties on luxury goods. These measures contribute to more progressive taxation, encouraging formal high-value economic transactions and reducing illicit schemes.
Specific changes introduced include a VAT reform, with the standard VAT rate increasing from 12% to 16% starting January 1, 2026. This is the first increase in over a decade and aligns with global norms. However, reduced VAT rates of 5% in 2026 (rising to 10% in 2027) for pharmaceuticals and medical services have been implemented to soften the impact on essential sectors.
Other changes include the retention of only three special tax regimes, with clearer rules, and the introduction of a 10% excise duty on individuals purchasing luxury goods such as very expensive cars, vessels, alcohol, and cigars.
Collectively, these reforms are geared toward modernising Kazakhstan’s tax system, reducing informal economic activities by improving compliance and enforcement, incentivising formal business behaviour, and enhancing government revenues to support economic growth.
However, the new Tax Code has sparked debate among Kazakhstanis and businessmen. Some question how a raise in taxes will help or who will compensate those who can't pay the increased taxes. Others suggest paying taxes and sleeping in public places as a form of protest. Skepticism about the intentions of the government regarding the new Tax Code also persists.
Despite the controversy, Deputy Prime Minister Serik Zhumanazarov proposes abolishing the tax on labor for working citizens, a move that could alleviate some concerns. The new Tax Code, like the car safety belt reform in Kazakhstan, is a bold step towards modernisation and economic growth, but its success will depend on its implementation and public acceptance.
- The new Tax Code, signed into law by President Kassym-Jomart Tokayev, has sparked debate in Kazakhstan's general-news and politics circles, with some business owners questionning whether increased taxes will help or who will compensate those who can't afford the new rates.
- The Tax Code reform, aimed at modernizing Kazakhstan's finance sector and reducing the shadow economy, includes measures such as digital tools for tax payments, simplified tax regimes, and differentiated income tax rates, but these changes have raised concerns about their impact on business and individual taxpayers.
