This report on Kazakhstan is part of the OECD Tax Policy Reviews series. OECD Tax Policy Reviews are intended to provide independent, comprehensive and comparative assessments of OECD member and non-member countries’ tax systems as well as concrete recommendations for tax reform. By benchmarking countries’ tax systems and identifying tailored tax policy reform options, the ultimate objective of the Reviews is to enhance the design of existing tax policies and to support the adoption and implementation of tax reforms.

The country tax policy analysis presented in this report was prepared before the outbreak of the Covid-19 pandemic and the economic crisis that resulted from it. While the health, economic and budgetary impact of the crisis remains unclear at the time of the publication of this report, it has become clear that the crisis will be costly for countries around the world, including for Kazakhstan. In light of the low tax collection and weaknesses in the design of the tax system, fundamental tax reform has become even more urgent in Kazakhstan than before the outbreak of the Covid-19 pandemic.

This chapter presents a summary overview of the main findings from the Country Tax Policy Review. Firstly, the chapter considers the importance of raising tax revenues to support Kazakhstan’s medium-term goals and longer-term sustainability. Secondly, it examines equity issues - how to share the tax burden more fairly across society. Recommendations include moving towards a broader and more progressive PIT system, raising SSCs to support the underperforming health and welfare systems and enhancing the design of the VAT. Finally, it considers competitiveness issues. Among the recommendations are to maintain CIT rates and broaden the CIT base and simplify the design of special tax regimes for SMEs.

Setting the scene for tax reform in Kazakhstan. This chapter sets the scene for tax reform in Kazakhstan. The economy remains dependent on natural resources, multiple inflationary pressures continue to pose risks and seemingly positive labour market outcomes may mask deeper challenges. While the authorities are focused on reducing the non-oil budget deficit, the current targets may be ambitious and discretionary targeted transfers to the budget from the National Oil Fund remain significant.

This chapter considers tax revenue trends and the tax mix in Kazakhstan. Taxes as a share of GDP in Kazakhstan remain low by international standards. The tax mix is concentrated on value-added tax (VAT) and corporate income tax (CIT) and much less so on Personal Income Tax (PIT), Social Security Contributions (SSCs) and property taxes. At the same time, important sources of tax revenue such as CIT and export duty taxes rely on the extractive sectors of the economy such as mining and the fossil fuel sector. Kazakhstan aspires to become one of the top 30 global economies by 2050. However, tax revenues may be too low to support the ambitions of the authorities including to meet tax revenue and expenditure targets and to reduce the non-oil deficit. Raising more taxes will be necessary to support the country’s medium-term goals and longer-term sustainability.

This chapter examines equity issues in Kazakhstan and how the tax burden might be shared more fairly across the population. It focuses on personal income taxes, social security contributions and value added taxes. Recommendations to strengthen the design of these taxes are provided in the table overleaf.

This chapter examines tax competitiveness issues in Kazakhstan. It considers companies, SMEs and the self-employed. Recommendations to strengthen the design of the corporate income tax and SME taxation regimes are provided in the table overleaf.