In-depth look at Kazakhstan freeing businesses from paying taxes for 3 years(Exclusive)

Business Materials 12 September 2019 17:25 (UTC +04:00)

Baku, Azerbaijan, September 12

By Nargiz Sadikhova - Trend:

Exemption of micro and small business from paying taxes related to main activities will lead to a significant increase of tax payments in medium- and long-term perspective, the expert on economic reforms Bakytzhan Sarkeyev told Trend in an interview.

Recently, President of Kazakhstan Kassym-Jomart Tokayev has mandated to temporarily exempt local ventures of micro and small business from paying taxes related to main activities for three years.

According to the expert, the issue of exemption of enterprises from taxes at the beginning of business activities, i.e. newly established companies, has been brought up in Kazakhstan over the period of last 10-15 years.

“This measure has been planned as a stimulating measure for increase of small and medium enterprises (SME) share in GDP and to the increase of the number of Kazakh citizens engaged in entrepreneurship activities. This is why, in my opinion, this is a very positive measure, which could give an impulse to development of SME and to a significant increase of SME share in economy, which currently is 28 percent,” Sarkeyev said.

In expert’s opinion, the exemption of business from taxes will be introduced in regards to only newly established micro and small businesses instead of all operating ventures.

“It is through this measure that the newly established ventures of entrepreneurship will be able to get stronger and get going. Furthermore, starting from 2020, the SMEs taxes will be managed by local executive authorities and this is why this measure will be a good tool for local akimats (administrative centers) to increase the number of enterprises,” Sarkeyev noted.

The expert also highlighted that the introduction of this measure will not lead to a decrease of tax payments. According to him, in medium- and long-term perspective this measure will rather lead to a significant increase in value of tax payments due to the increase of tax payers.

“Actually, during first three years after introduction of the exemption, the business activity will increase due to the growth of the number of enterprises, which will allow for substitution of loses from taxes related to main activities with increased value of VAT and various payments and fees,” expert added.

In conclusion, Sarkeyev noted that no doubt the introduction of the measure will lead to an increase of the number of work places.

“Overall, the measure in question will lead to an increase of number of business entities, those engaged in SMEs, as well as to a significant increase of indicators of certain areas of economy development, such as trade, services, agriculture and the manufacturing of ready-made products,” the expert summarized.


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