Kazakhstan's decision to increase the value-added tax (VAT) by four percent is not expected to cause inflation to deviate from the planned corridor, according to the Ministry of National Economy.
Azamat Amrin, Vice Minister of National Economy, explained that a detailed analysis indicates that changes in the VAT rate don't have a direct connection with the level of the shadow economy.
"Increasing the VAT rate to 16% will not lead to a deviation of inflation from the planned corridor. It will affect the inflation rate within 1 percentage point and will not affect agricultural goods, considering that domestic agricultural producers enjoy preferential tax regimes," said Amrin.
He noted that the share of food products in Kazakhstan's import structure was 9.4% in 2022, and increasing the VAT rate on imported goods is not expected to significantly contribute to the inflation rate.
Amrin highlighted the positive effects of the VAT rate increase, stating that it strengthens the budget's ability to finance social obligations and enhances the competitiveness of domestic goods.
"Increasing the load on imported goods will enable our domestic producers, who enjoy tax benefits and subsidies, to increase their production to replace imported goods," added Azamat Amrin.
In September, Amrin had previously mentioned that discussions were underway in Kazakhstan regarding the possibility of raising the value-added tax from 12% to 16%, expecting additional budget revenues of 2-2.4 trillion tenge from this adjustment (over $4.3bn-$5.2bn).
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