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Retail Tax Instead of VAT in Kazakhstan

Monday 26 October 2015

ASTANA (Interfax-Kazakhstan) — Nur Otan Public Council for Entrepreneurship Support plans to submit a proposal to the Majilis to replace the value-added tax and corporate income tax with a 12% retail tax, Director of the Centre for Macroeconomic Research, a member of the Nur Otan Public Council for Entrepreneurship Support Olzhas Khudaibergenov, said.

“Retailers will have no need to comply with a number of tax regimes at once. There will be only one tax regime with the three types of rates — 12% for cash income, 7% for card payments and 5% for online shop transactions”, Khudaibergenov said on Tuesday in Astana. He noted that “this rate scale is set to encourage businesses to opt for more non-cash transactions and prompt consumers to use cards instead of paying cash”, adding “Retail tax revenues will go to local budgets to spur authorities to develop retail business in the regions.”.

Conventional or retail sales tax is levied on the sale of a good to its final end user and is charged every time that item is sold retail. Sales to businesses that later resell the goods are not charged the tax. A purchaser not an end user is usually issued a resale certificate by the taxing authority and required to provide the certificate to a seller at the point of purchase, along with a statement that the item is for resale. The tax is otherwise charged on each item sold to purchasers without such a certificate and who are under the jurisdiction of the taxing authority.

The introduction of retail tax will lessen the need for cash money supply, bring consumers’ money into the banking sector, significantly cut back shadow economy activity and contribute to the inflow of tax revenues, according to the Council.

Earlier, Minister of National Economy Erbolat Dosayev declared that due to low global oil prices the Kazakh government should alter the taxation system by introducing sales and retail taxes on trade and catering entities. “Relevant amendments are to be made to the Tax Code in 2016”, he said.

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