A petition has been launched opposing the reduction of the VAT threshold in Kazakhstan.

The authors of the appeal, Zhangeldy Suleymanov and Anuarbek Skakov, assert that the recently proposed reduction of the VAT registration threshold to 15 million tenge by the Minister of National Economy of the Republic of Kazakhstan, Serik Zhumangarin, will significantly worsen the situation for small and medium-sized enterprises (SMEs) and may even lead to a decrease in their overall numbers due to the substantial increase in tax burden.

The petition states that VAT is too complex to manage, which will greatly affect the cost of services provided by SMEs. The authors elaborate on their viewpoint in 8 points:

1. The current threshold of 20,000 MRP, which amounts to 78,640,000 tenge by 2025, is considered quite low and uncomfortable for SMEs, prompting many entrepreneurs to avoid exceeding this threshold.
2. VAT registration will require entrepreneurs to add the tax amount, which is expected to rise to 20%, to the prices of their goods, works, and services. Consequently, their prices will increase by at least 20%, but in reality, the price hike will be even more significant.
3. Many representatives of SMEs cannot claim VAT deductions because they either create their own goods, works, and services or their suppliers are not VAT payers, such as purchases from markets. As a result, entrepreneurs will have to pay almost the entire VAT amount added to the price of their goods, works, and services to the budget.
4. VAT is regarded as the most complex tax to calculate worldwide. In Kazakhstan, judicial bodies and the Supreme Audit Chamber have noted ambiguities and numerous violations in the interpretation of VAT by tax authorities. Undoubtedly, SMEs will struggle to fulfill their VAT obligations independently and will also find it difficult to obtain qualified assistance from specialists due to the high cost of their services.
5. VAT requires the submission of quarterly declarations, maintenance of tax registers, full accounting, issuance of electronic invoices, their accounting, and verification of received electronic invoices. Currently, SMEs are not obligated to perform any of these tasks. Therefore, entrepreneurs will be compelled to hire accountants, resulting in additional monthly expenses.
6. The majority of complaints from tax authorities concern VAT. This means that SMEs will also receive a large number of notifications for desk audits and/or tax inspection orders. Naturally, SMEs have little chance of winning such disputes, leading to often unjustified additional tax assessments.
7. Given the special attention of tax authorities to VAT, entrepreneurs will have to devote considerable effort to properly document transactions with both their customers and suppliers, including the drafting of contracts. Legal assistance will be necessary for these tasks, further adding to SMEs' costs.
8. Tax authorities impose strict penalties for any VAT violations, often without justification, such as "freezing" accounts, deregistration from VAT, and blocking electronic invoices (E-invoices). Such measures almost always lead to bankruptcy and business liquidation.

“We have outlined eight negative consequences for SMEs. In reality, there will be more. It is clear that lowering the threshold will lead to a reduction in SMEs or make their operations more difficult. We urge you to abandon the idea of reducing the VAT registration threshold to 15 million tenge,” the petition states.

In less than a day, the petition gathered 50 signatures, which is necessary for it to become publicly accessible on the main page of the eРetition.kz website. It is currently undergoing moderation, awaiting publication.