Tax policy analysis

Kazakhstan needs to reform its tax system to increase its resilience beyond the COVID-19 pandemic


24/09/2020 – Kazakhstan needs to reform its tax system to reduce its dependence on resource-related revenues and to strengthen its economic resilience beyond the COVID-19 pandemic, according to a new OECD report.


The Tax Policy Review of Kazakhstan provides an in-depth and comparative assessment of Kazakhstan's tax system, and identifies a number of recommendations for tax reform. The publication, which is part of the OECD Tax Policy Reviews series, focused on the examination of personal income tax, social security contributions, value-added tax and corporate income tax. The analysis presented in this report was prepared before the outbreak of the COVID-19 pandemic and the economic crisis that resulted from it.


The report notes that Kazakhstan had begun to show signs of economic recovery prior to the COVID-19 crisis as a result of the government's previous tax reforms. However, further reform is needed to strengthen the resilience of Kazakhstan's economy. The report highlights the need to raise tax revenues to meet the government's revenue and expenditure goals and to reduce the non-oil deficit.


Kazakhstan currently relies heavily on revenues from the natural resource sector to balance its budget, however, the financing needs of the country could be met by gradually increasing some non-resource taxes that have considerable potential for generating additional revenues. For instance, Kazakhstan could consider a gradual transition to a progressive personal income tax system to raise revenues and address inequality over the medium-term. This reform requires measures to strengthen the functioning of the tax administration, including the introduction of an end-of-the-year tax declaration.


The report also finds scope to reform the taxation of personal capital income. In addition, Kazakhstan could improve the design and administration of the VAT and raise additional revenues with a modest increase in the VAT rate. The report also calls for the broadening of the corporate tax base, in particular by better targeting corporate tax incentives and by reducing and improving the design of the simplified tax regimes for SMEs.


"These reforms should help Kazakhstan address some of its most pressing economic and social challenges, including reducing the non-oil deficit and supporting its economic diversification", said Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration. "The aim is to support the development of a modern, fair and sustainable tax system, which are aligned with Kazakhstan's priorities".



Media queries should be directed to Pascal Saint-Amans, Director of the OECD Centre for Tax Policy and Administration (tel. +33 6 26 30 49 23), or David Bradbury, Head of Tax Policy and Statistics Division (+33 1 45 24 15 97).


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