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Daulet Ergozhin "tax inequality has led to economic problems"

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At the regular meeting of the Discussion Club "Atameken" the chairman of the State Revenue Committee of the Republic of Kazakhstan of the Ministry of Finance Daulet Ergozhin explained to the experts the nature of VAT and the reasons, which urged the Government to lower the threshold for registration of payers of value added tax.

"I would like to make a historical excursion on the topic of our discussion. When in 2008 the Parliament discussed the new draft Tax Code, there was a stormy debate with the business community. As a result of it, a number of categories of entrepreneurs have been excluded from the list of VAT payers. This was done for the development of small businesses. But it was deformed the whole system of taxation, creating unequal conditions: there are companies that pay VAT, submitting reports. And there are companies that do not pay this tax ... This raises the question of why the principle of equality in taxation was violated? Let me remind you that the VAT is classified as "indirect tax", which must be paid by all", - said Daulet Ergozhin.

Meanwhile, the Chairman of the State Revenue Committee said that VAT exemption had a positive effect: the number of entrepreneurs over the past six years has increased by more than 60%. Nevertheless, the tax inequity has led to serious economic problems.

"Why does business not grow, but gets fragmented? Take any medium-sized company that has recently been launched. The first task that the owner has set to an accountant - fragmentation. They find a bunch of relatives to do this, or ask employees of a company to register individual enterprises ... But we need to grow! We must go forward, become bigger and stronger, so that the banks could evaluate us as normal taxpayers and give out loans", - said the chief fiscal officer.

More than 77 thousand companies fall under the new tax status. There were versions that now "VAT payers will, even in remote villages." But there are no such taxpayers in the villages - they just do not reach these turnovers. The bulk of the people, which are concentrated in the villages, work by a patent system, that is, carry out occasional payments", - said Daulet Ergozhin.

Realizing that the process of transition to a new track will be difficult and uneven, fiscals offer to use to the maximum the time remaining before the adoption of the amendments to the Tax Code (the draft law is under consideration of deputies of the Mazhilis of the Parliament) through the advocacy campaigns.

"In principle, we are ready for a dialogue, if it is necessary to work out issues of the administration. We discussed the issue in collaboration with "Atameken", and now we are working on an action plan on the coverage of tax innovations and training of entrepreneurs. Our representatives will go to all the cities and villages, and explain: what, why and how. Given the fact that we don’t have such a large number of taxpayers, we will conduct work virtually with every entrepreneur personally, explaining the technology", - suggested the chairman of the State Revenue Committee.

Chairman of the Board of NCE RK Ablay Myrzakhmetov understood the position of Daulet Yergozhin.

"First, we assumed that in the current situation, taking into account what has happened and is happening, maybe it isn’t the best time for tax changes. The main thing that we are concerned about is the fall of the consumer demand and contraction of the money supply in tenge. And frankly, in these conditions, we understand the Government's argument regarding the fact that it is high time for the tax reform. Yes, maybe now is not the best time for this, but during the best times, we always postpone it "for later", - said the head of the National Chamber. - "Second, it is necessary, of course, to calculate an additional burden on small businesses associated with the necessity of bookkeeping. VAT is not a simple tax. Qualified accountants are required for this purpose".

The Chairman of the State Revenue Committee voiced other concerns that currently trouble business.

"A serious problem is the lack of "long money", lack of credit and collateral supply. It all starts to compress the market to such an extent that we are now looking at the figures "M1" and "M2" - they all fall down. When the money supply begins to contract - offsets and barters are applied. This indicates a drop in business activity ", - said Daulet Ergozhin.

According to Ablay Myrzakhmetov, lack of a coherent monetary policy affects all sectors of the economy.

"We are actively discussing topics of subsidies to agricultural producers, where serious reforms are coming. Some of the farmers say openly: the amount of subsidies isn’t as important for us, as cheap working capital in time for spring sowing campaign. It turns out that the fate of the business depends more on what we are discussing now rather than monetary and exchange rate policy of the National Bank. If the problem of long, relatively cheap finances was solved, there would not be such queues for the measures of state support", - said the Chairman of the NCE "Atameken", summing up the results of the discussion club.


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