As part of the implementation of the tax and budget reform, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin held a meeting to enhance tax administration, as reported by Kazpravda.kz citing the government press service.
One of the steps in the fiscal system reform is the fight against the shadow economy, which undermines the stability of economic development. As noted during the meeting by Deputy Minister of Finance Yerzhan Birzhanov, over the past 5 years, the share of the unobserved economy in Kazakhstan's GDP has been steadily declining: from 23.69% in 2019 to 17.52% in 2023, primarily due to the gradual transition to cashless payments. The highest share of the shadow economy remains in wholesale and retail trade (3.53%), healthcare (2.04%), agriculture, forestry, and fisheries (1.96%), construction (1.92%), and education (1.49%).
“We see the solution to the long-standing problem of the existence of a shadow economy through fiscal reform involving sectoral, judicial, and supervisory government agencies. This is to jointly participate in identifying abuses that lead to the loss of state resources,” noted Yerzhan Birzhanov.
By 2025, the goal is to reduce the indicator of the unobserved economy to 15% of GDP. To achieve this, the Ministry of Finance proposes to include problematic sectoral issues that hinder the exit of industries from the shadows as KPIs in the development plans of government agencies.
“The development plans of government agencies need to be viewed from a new perspective, with a service-oriented approach and digitization of sectors. This will allow us to move away from a formal approach to the implementation of the plans outlined in the Comprehensive Action Plan to combat the shadow economy. We suggest that government agencies include KPIs with measures to combat the shadow economy in their development plans for 2025-2027,” he emphasized.
Additionally, during the meeting, recommendations from the IMF were voiced regarding the removal of banking secrecy restrictions in the revision of the Tax Code. As part of strengthening tax administration, it was proposed to change the methodology for calculating the share of the shadow economy in GDP, and to enhance the digitization of sectors, especially those with a high level of shadow activity. In place of the previous Comprehensive Action Plan to combat the shadow economy, five sectoral government agencies with low performance indicators in this area will develop their own roadmaps outlining their approaches and actions. Other government agencies will incorporate KPIs with measures to combat the shadow economy into their sectoral development plans. The Ministry of Finance, as the coordinating and controlling body for the comprehensive work of the government in this direction, will strengthen its functions for monitoring the shadow economy.
All approaches, steps, and actions of government agencies aimed at reducing the shadow economy will be compiled into a roadmap. Furthermore, Serik Zhumangarin tasked the Ministry of Finance, together with the Ministry of Justice, sectoral government agencies, and the National Chamber of Entrepreneurs "Atameken," to develop proposals for improving the effectiveness of tax audits and controls, and to formulate suggestions for further reducing the share of the shadow economy.