The Ministry of National Economy of the Republic of Kazakhstan presented draft government resolutions under the new Tax Code. The following were submitted for discussion:

a list of types of activities for which the application of the special tax regime (STR) based on a simplified declaration is prohibited;

list of types of activities for which the use of the STR is permitted for the self-employed.

These documents were developed in pursuance of Articles 718 and 723 of the Code and are aimed at streamlining the application of special tax regimes, increasing transparency and supporting entrepreneurship.

Prohibition list

The simplified tax return system combines elements of two existing regimes: the simplified tax return and the retail tax.

The following people will not be able to use this mode:

- business entities whose income exceeds 600 thousand MCI (2,359 billion tenge) per year;

- legal entities with a shareholding of other companies of more than 25%;

- organizations where the founders or participants simultaneously participate or are founders in other legal entities on the STR;

- non-profit organizations;

- taxpayers (individuals, sole proprietors) who are founders or participants of a legal entity applying a special tax regime;

- participants of the SEZ, «Astana Hub»;

- taxpayers working under joint activity agreements.

The list of prohibited sectors includes industries associated with large businesses: manufacturing, construction, subsoil use, the activities of natural monopolies, wholesale trade, retail in areas larger than 2 000 square meters, telecommunications, the Internet and IT, financial and insurance services, professional agency and consulting services, R&D, etc.

Of the 1 111 CEAs, the restriction will affect 795 types of activities (70% of CEAs), but in terms of taxpayers, only about 30%.

The main reason is that a significant portion of transactions in these areas (more than 76% of total turnover) are transactions with large businesses that use the generally established regime: in construction - 99,9%, in subsoil use - 98,7%, in transport and warehousing - 96,7%.

Who will retain the right to a simplified regime?

It is proposed to maintain a simplified regime for approximately 300 types of activities aimed at the population:

- retail trade in areas up to 2000 sq. m (including pharmacies);

- retail trade by mail order or via the Internet, network marketing, as well as other retail trade outside of stores;

- accommodation, catering, housing rental and transportation services;

- light and food industry;

- passenger transportation;

- services in the field of pre-school and additional education, medical and social services;

- household and construction work for the population;

- creative industry, sports, culture;

- agriculture.

As a result, approximately 70% of all taxpayers will retain the simplified tax system. Small businesses focused on B2C will continue to operate under the simplified tax system, while larger businesses will transition to the general tax system.

At the same time, taxpayers with a turnover of up to 40 million tenge per year will not be VAT payers when switching to the general regime.

The document will reduce the unfair use of the STR, improve administrative efficiency, fairly distribute the tax burden, and create more favorable conditions for small businesses.

Permit list for the self-employed

A separate resolution of the Government of the Republic of Kazakhstan proposes to establish a list of activities available to self-employed individuals without registering as individual entrepreneurs, without employees, and with an income of up to 300 minimum monthly calculation indices (MCI) per month. It includes 46 activities that meet these criteria.

The right to apply the STR will be retained, in particular, by such types of activities as shoe repair, education in the field of sports and recreation, education in the field of culture, other auxiliary activities in the field of education, cleaning of residential buildings, activities in the field of photography, beauty salon services, specialized construction work, taxi services, rental and hire, repair of computers, personal consumer goods and household goods, as well as the provision of other individual services.

Source : https://www.gov.kz/memleket/entities/economy/press/news/details/1076241?lang=kk