Tokayev signs new Tax Code with VAT hike to 16% and progressive income tax

Arujan Al-Farabi

Generated using AI

Tengrinews.kz - President Kassym-Jomart Tokayev has signed Kazakhstan’s new Tax Code into law, introducing major reforms aimed at simplifying tax administration and making the system more equitable.

Tengrinews.kz - President Kassym-Jomart Tokayev has signed Kazakhstan’s new Tax Code into law, introducing major reforms aimed at simplifying tax administration and making the system more equitable.

The revamped code reduces the volume of tax reporting by 30% and cuts the number of taxes by 20%. Key changes include revised rates for VAT and income taxes, reduced thresholds for mandatory VAT registration, and new progressive tax measures for high earners.

The standard value-added tax (VAT) rate will increase to 16%. However, a reduced VAT rate of 5% will apply to medicines and medical services starting in 2026, rising to 10% in 2027.

Several services will be exempt from VAT entirely, including those under the Guaranteed Volume of Free Medical Care (GVFMC) and Mandatory Social Health Insurance (MSHI), treatment for orphan and socially significant diseases, printed book publishing, and archaeological research. Periodical print media will be taxed at a reduced 10% rate.

The VAT registration threshold will be lowered to 10,000 MCI (approximately 40 million tenge in 2025).

The new code introduces progressive rates for personal income tax (PIT):

A 15% rate will apply to annual incomes exceeding 8,500 MCI.
The same rate applies to dividends and business income above 230,000 MCI.
Farmers will benefit from a reduced 4.5% rate on excess income due to existing sectoral benefits.

Luxury taxes will target individuals purchasing:

Cars over 75 million tenge
Boats over 100 million tenge
Alcohol exceeding 0.5 million tenge per liter
Cigars priced over 10,000 tenge each
The property tax will also increase for individuals whose total real estate value exceeds 450 million tenge.

The corporate income tax (CIT) rate stays at 20%, but new differentiated rates will apply:

25% for banks (excluding SME lending) and gambling businesses
5% for social sector organizations in 2026, increasing to 10% in 2027
3% remains for agricultural producers

To stimulate the stock market, dividend tax exemptions will continue, and securities issued by Baiterek Holding will remain CIT-exempt until 2031.

Additional incentives include a five-year MET (mineral extraction tax) holiday for new low-profit mining projects, and perks for geological exploration and mineral processing.

The code aims to create a more supportive environment for taxpayers:

Cameral control will become more advisory in nature
Debt collection processes will be simplified
Accounts will no longer be frozen for small outstanding amounts
Self-employed individuals will be able to calculate and pay taxes through a mobile app

Special tax regimes are streamlined to three categories:

Self-employed
Simplified declaration-based regime
Farms
Key social benefits and deductions
Pension payments from the UAPF will be exempt from PIT
Transport tax is reduced for cars over 10 years old
The disability tax deduction increases from 882 MCI to 5,000 MCI

The new Tax Code comes into force on January 1, 2026.

president Tokayev Kassym-Jomart Taxes tax