The Prime Minister of the Republic of Kazakhstan, Olzhas Bektenov, held a working meeting with the Deputy Prime Minister - Minister of National Economy, Serik Zhumangarin, and the Minister of Finance, Madi Takiyev. The issues of tax and budget reform and strengthening control over tax revenues were considered.
The Minister of Finance, Madi Takiyev, reported that as part of the analysis, facts of the use of previously introduced special tax regimes (SRTs) by unscrupulous taxpayers as a legal scheme to optimize tax obligations in order to support and develop small businesses were identified.
Today, 2.3 million taxpayers are registered in the country. Of these, only 8%, or 137 thousand, are VAT payers. 81% of the total number of entities operate under a special tax regime using a simplified declaration, and 85% of them indicate income of up to 15 million tenge.
“We analyzed the mutual settlements of entities using special tax regimes with companies operating under the generally established regime. The analysis shows that the mutual settlements between such regimes increased by 2 times last year - from 5 trillion to 10 trillion tenge. At the same time, out of the total turnover of 16 trillion tenge under special tax regimes, the mutual settlements with the generally established regime amount to 10 trillion tenge. That is, hundreds of billions of tenge are earned, and taxpayers pay only a small amount of tax,” said Madi Takiev, citing a number of fragmentation schemes used by businesses.
To optimize taxes and reduce profits, companies adhere to the principle of increasing “documentary” costs. One company purchases goods and resells them at cost to another legal entity operating in an optimized regime. As a result, the first company shows losses, while the second, using preferential terms, evades paying VAT.
Also, the method of dividing a business into several legal entities is used. For example, a bar, a dining room and karaoke in one institution are registered as individual companies, or each floor of a hotel belongs to a different individual entrepreneur. When the income of one of them reaches 78 million tenge, its activities are terminated, and another legal entity takes its place, which allows evading VAT.
"To reduce the burden on the payroll fund, employees of the enterprise are dismissed, registered as individual entrepreneurs, and serve the former employer not as employees, but as individuals. Accordingly, tax payments to the payroll fund are reduced, and social responsibility is removed from the employer, and further it is assumed by the entrepreneur," said Madi Takiev.
In this regard, the Ministry of Finance of the Republic of Kazakhstan proposes a number of measures to combat fragmentation in order to improve tax administration:
introducing a legislative criterion for business fragmentation;
introducing the principle of the primacy of substance over form in tax disputes;
introducing methods for monitoring and proving such facts;
limiting the types of activities for individual entrepreneurs.
"From the information of the Minister of Finance, we see that there are entrepreneurs who do not fulfill their duties honestly, using various schemes for optimizing the tax burden. With billions of turnover, they pay amounts to the budget that do not correspond to the profits they earn. We have a complete list of such large companies. The list includes BI Group, BAZIS and many other large construction companies. There are well-known and popular restaurants, fitness clubs and various companies operating in other sectors of the economy.
Taking this opportunity, I would like to address the owners and managers of large companies that are currently using various schemes for optimizing the tax burden. Today or tomorrow, your companies will receive notifications from the tax authorities about the need to pay additional tax amounts. "I ask everyone to submit additional tax returns to the tax authorities within two weeks and pay a fair amount of tax.
If these actions are not taken, the state reserves the right to use all resources at its disposal, including fiscal and law enforcement agencies.
The requirement will be strict, but if business fairly fulfills its obligations to the state, we are ready to enter into a dialogue," Olzhas Bektenov noted.

Source : https://www.gov.kz/memleket/entities/shymkent/press/news/details/948650