Prime Minister Karim Masimocv explained that the concept contains only the “main directions” of the reform and no numbers will be discussed until next month.
Photo: Yury Martyanov
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Kazakhstan Fixes Its Tax Code
The government of Kazakhstan has presented a concept for a new tax code. The country’s parliament may consider it in September. The country plans to ease the tax burden on business, compensating for it by sharply increasing taxes on mineral users, except for the two dozen largest of them, mainly those at the Tengiz, Kashagan and Karachanak fields. The concept was prepared by a working group headed by Deputy Prime Minister Erbol Orynbaev. Prime Minister Karim Masimocv explained that the concept contains only the “main directions” of the reform and no numbers will be discussed until next month. The general outlines are already clear, however. Another innovation in the concept is the introduction of international accounting in tax calculations in Kazakhstan.
The main change suggested in the concept is the lowering of the corporate income tax, which is now 30 percent. The Kazakh Finance Ministry wanted the tax lowered to 10 percent, while the Ministry of the Economy and Budget Planning favored a more conservative 20-percent rate, as the proposed 10-percent rate would mean a loss of 800-900 billion tenge ($7-8 billion). The working group chose a 15-percent tax rate. The group proposes to eliminate advance tax payments for small and medium-size businesses, while preserving them for the 300 largest businesses and for mineral users. That would maintain 70 percent of advance payments. The group also suggests lowering VAT from 13 to 12 percent. Furthermore, the concept would replace the gradated social tax (5-13 percent) with a 10-percent flat tax. The personal property tax would be transformed into a real estate tax and the tax on personal real estate worth over 30 million tenge ($250,000) would be raised from 0.05-0.5 percent to 1-2 percent.
Minerals users will make up for the falling budget income. They now pay a royalty, a tax on unearned income on exported oil, a surplus profits tax, and a so-called subscription bonus. The current tax code also allows for product-sharing agreements and a “stable” tax regime for mineral users that signed contracts before 2004. The working group suggests changing the entire system of taxation for the oil sector, preserving the bonus to the budget, but replacing the royalty tax with a mineral-use tax and replacing the unearned income on export oil and natural gas condensate with export duties. Product sharing and the stability regime would be eliminated for all except, the key contract with Tengizchevronoil and the 15 existing product sharing agreement. There are now over 600 mineral use contracts in force in Kazakhstan now, and about 80 percent of them are “stabilized.”
www.kommersant.com
All the Article in Russian as of June 23, 2008
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