The Ministry of National Economy and State Revenue Committee delivered a presentation on the sales tax at NCE "Atameken"

Director of the Department of Tax and Customs Policy of the Ministry of Economy Azamat Amrin said that it is proposed to charge sales tax at each stage of sale of the goods, without presentation of an input offset of sales tax, i.e. its inclusion in the cost, that is, the cascade method. Tax refund is not available in such a scheme. The sales tax rate is 5%.

The order of benefits, according to Amrin, will be based on the current framework VAT scheme. "It is proposed not to levy sales tax on socially important goods and works that are not of the nature of the mediation: education, health services, international freight forwarding, and so on", - he said.

He added that some existing exemptions will be abolished: 70 per cent rebate on VAT for agricultural producers; off-set method of payment; zero rate for the sale of goods on the territory of free economic zones; exemption from tax of turnovers of scrap ferrous and non-ferrous metals, services of management, maintenance and operation of housing facilities, goods produced on the territory of free warehouses, notary services, advocacy, lottery tickets, refined precious metals, residential buildings and land.

Amrin pointed out that the introduction of a sales tax will bring in an additional budget to the country of about 800 billion tenge.

Among the advantages he listed such aspects as ease of calculation and administration, additional revenue to the budget, improvement of control, the absence of corruption component, as well as reduction of the number of intermediaries.

"The essential requirements for the introduction of sales tax is the use of electronic invoices, the introduction of cash registers with an online data transfer option, cancellation of special tax regimes for SMEs and the agricultural sector", - said the representative of the Ministry of Economy.

Deputy Chairman of NCE RK "Atameken" Rustam Zhursunov, who acted as a moderator of the round table, in turn, noted that NCE conducted analysis of six sectors in order to find out what impact the introduction of sales tax will have on business. "Definitely the growth of production costs. At the rate of 5% sales tax, the goods will rise in price by 9-15%. We see a serious threat to SMEs. According to our calculations, there are 1.3 million businesses in Kazakhstan, of which 930 thousand are individual entrepreneurs. 41% of individual entrepreneurs work in the field of trade. It is obvious that according to the proposed innovations, the trade sector does not fall into the category of subjects that work under patents, thus, they will have to keep records of income and expenses. Accordingly, we believe that these entities are at risk, they will start to close. We see a rather high-risk - about 200 thousand entrepreneurs", - said Zhursunov, adding that the reform will also lead to a decrease in the competitiveness of domestic exporters.

The executive director of the Dairy Union Vladimir Kozhevnikov also made a speech during the meeting. "I have the impression that the proposals, which were voiced today, were poorly discussed with the business. We asked for an opinion all of our businesses, none responded positively about the changes. If you adopt this system, many businesses will be on the verge of bankruptcy", - he said.

Director of Almaty Chamber of Entrepreneurs Yuri Tleumuratov supported the colleagues, stating that the shift  to the sales tax is not timely yet in Kazakhstan. "Among the positive aspects of the introduction of sales tax, you call the optimization of business structure by enlarging and reducing the number of intermediaries. You could have written directly instead: destruction of small and medium business. Because all services around the large enterprises - are SMEs. In my opinion, the VAT has not yet been exhausted", - he said.

The President of the Association of Entrepreneurs of Almaty Viktor Yambaev expressly stated that it is necessary to postpone the discussion of the sales tax. "The Ministry of Finance should have the courage to say that society, business and tax structures are not ready for the introduction of a new tax, which ultimately confuses the society", - he said.

The representative of LLP "Eurasian Group" Marina Bachurina noted that it is proposed to introduce the "conditionally-called sales tax on the principle of value added tax". "As you know, any tax on turnover leads to erosion of working capital of the taxpayer. If your working capital is washed away, it means a decrease in profitability, the profit declines, which is a source of investment, payroll, etc. ", - she said. She also noted that the public authority should calculate the multiplier effect in the long term before introduction of the sales tax. For example, as a result of integration of business, self-employed and individuals will lose their source of income, an increase of imports compared to domestic production, therefore, a reduction in the domestic tax base.

In general, entrepreneurs and business associations expressed the unanimous opinion that it is better to refrain from introducing any major changes during the crisis. In economically difficult time, the introduction of a new tax could have a negative impact on entrepreneurs, and therefore the need to consider the preservation of VAT.

Representatives of the Ministry of Economy assured that work on the study of the details of implementation of the sales tax has just begun. "There is no final decision on introduction of the sales tax yet. The order of the Head of State is: to consider thoroughly the introduction of a sales tax", - said Amrin. In this connection, the Ministry of Economy is also waiting for proposals of the business community regarding improvement of VAT.