19,000 entrepreneurs to be subject to VAT in Kazakhstan
The Atameken NCE RK opposed the planned reduction of the VAT threshold for entrepreneurs. The National Chamber has stated this immediately after completing its examination of the Draft Law "On Amendments and Additions to Some Legislative Acts of the Republic of Kazakhstan on taxation and improvement of the investment climate".
Remind that the Ministry of Economic Development has initiated a bill to reduce the threshold for VAT registration as a VAT payer from 30,000 to 20,000 MCI. According to the current standards stipulated in the Draft Law, taxpayers, whose annual turnover will exceed KZT53 million, rather than KZT 79.5 million, will have to be registered as VAT payers.
According to Atameken experts, the amendment in the legislation will lead to the fact that entrepreneurs working under a special tax regime based on a simplified declaration will have to enter the VAT registration. According to the results of 2018, there are about 12,000 individual entrepreneurs (IE) with an income of over KZT50 million, and about 7,000 legal entities in Kazakhstan.
Ultimately, this norm will increase the burden on small businesses: entrepreneurs will have to hire accountants for tax reporting, there will be a need to restructure the structure of work with counterparties, and there is the risk of fragmentation of business and the companies will become the shadow ones.
"The amendment is anti-entrepreneurial. Instead of enabling entrepreneurs to grow, they are driven back. There is no point in developing, because the small company has not yet managed to get back on feet, and it has already been taxed 12%. The VAT is difficult to administrate: if earlier I could submit a report once every six months and pay tax on my earnings, it would not work like that with VAT. It requires an accountant's judgment and the price of the error is very high. Business is trying to optimize its work. If a company has an 8% profitability, it will simply break down its income and create another company. Entrepreneurs will fragment business," Saken Karin, head of the Kazakhstani Tax Consultant Association, said.
In turn, Atameken will continue its work on the protection of business interests.
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