A high burden on the WF will make the business go into a "shadow"
The claimed reduction in the burden on the wage fund is not included in the draft Tax Code
On 3rd of February 2017, the Head of State, at an enlarged meeting of the Government, instructed to prevent an increase in the tax burden and study the planned increase in the burden on the wage fund.
Despite this, the draft of the new Tax Code does not provide for proposals previously announced by the Ministry of National Economy to reduce the burden on the payroll.
In particular, the draft of the new Tax Code dated by 14th of July 2017 officially submitted by the Ministry of National Economy to get the expert opinion of NCE RK "Atameken" proposed to reduce the social tax rate from the current 11% to 9.5% from 2018 to 6, 5% since 2020.
On 3rd of August 3, 2017, the official website of the Ministry of the Environment of the Republic of Kazakhstan posted an editorial revision of the draft of the new Tax Code, inconsistent with NCE RK Atameken, providing for the preservation of the social tax rate at the level of 11%, without the proposed reduction.
Taking into account the assignment of the Prime Minister of the Republic of Kazakhstan on mandatory coordination of the draft of the new Tax Code with the business community, NCE RK "Atameken" expects an official explanation from the Ministry of National Economy regarding the reduction of the social tax.
At the same time, proceeding from the execution of the instruction of the Head of State, NCE RK "Atameken" pays attention to the need to shift the emphasis of the tax policy to stimulate business activity, investment and reduce the share of the shadow economy.
In this direction, the conceptual issue is the overall tax and quasi-tax burden on the payroll fund.
Despite the objections of NCE RK "Atameken" from the very beginning of the discussions, as early as 2014, from July 1, 2017, employers' contributions and individual entrepreneurs' contributions to compulsory social health insurance were introduced at a rate of 1%, with subsequent increases in rates: from 2018 - up to 1.5%, from 2020 to 2%, from 2022 to 3%. Contributions will be deducted and employees themselves: from 2018 - 1%, from 2019 - 2%. Substantiated comments on the reform of the MSHI were also reflected in the expert opinion.
Along with MSHI, from 2020, the mandatory pension contributions of the employer will be introduced in the amount of 5%.
As a result, the total burden on WF will grow from 33.5% in 2016 to 43.5% in 2025.
Such a high load will cause a large number of entrepreneurs to shift to the "shadow" and reduce business activity. In this regard, Atameken will initiate proposals to prevent the growth of the tax burden at all further stages of consideration of the draft new Tax Code in the Government of the Republic of Kazakhstan, the Administration of the President and the Parliament of the Republic of Kazakhstan.
We propose to consider the issue of falling budget revenues inextricably with the increase in the efficiency of budget expenditures and the quasi-public sector, including in the framework of the order of the Head of State to audit expenditures for social protection, health care and education. In general, the National Parliament "Atameken" positively assesses the open format of the work of the Ministry of National Economy within the mandate of the Prime Minister to draft a new Tax Code that takes into account the interests of business in terms of: maintaining the VAT threshold of 30,000 MCIs and special tax regimes for small business, reducing the limitation period for SMEs from 5 to 3 years, introducing principles of good faith and the presumption of innocence, simplifying administration, and others. The calculation of the load on WF.
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