The Ministry of National Economy of the Republic of Kazakhstan has prepared a draft resolution defining the list of activities for which the application of a special tax regime based on a simplified tax return is prohibited.

A significant portion of the General Classification of Economic Activities (OKED) codes included in this list pertain to the manufacturing sector, which has raised concerns among businesses and the relevant committees of the Atameken National Chamber of Entrepreneurs. This issue was discussed at a joint meeting of the Manufacturing Industry Committee and the Machine Building and Metalworking Committee of the Presidium of the Atameken National Chamber of Entrepreneurs of the Republic of Kazakhstan, with the participation of industry councils from regional chambers of entrepreneurs.

“Large enterprises, when entering into contracts with companies that remain under the simplified special tax regime, risk losing the ability to offset taxes. For large enterprises, such a ban is beneficial; however, for small businesses, especially those serving the general public, it will create risks of increased product costs and complicate technical and administrative processes. A systematic approach is needed to resolve this issue,” emphasizes Kanat Ibraev, Chairman of the Manufacturing Industry Committee.

A ban on the simplified tax system will seriously weaken the position of domestic small-scale manufacturers, increasing their costs and reducing their competitiveness. This will intensify dumping by imported goods, which are often cheaper and do not face such tax barriers. As a result, there is a risk of local manufacturers being pushed out of the market, job losses, and a decline in tax revenues to the budget.

Many manufacturing enterprises, for example in the packaging sector, the production of paper and cardboard products, light metal products (aluminum cans), footwear, and synthetic fibers, are small companies employing 3–5 people. Such operations are automated, work on a made-to-order basis, and have low production volumes. According to Natalya Kuznetsova, a representative of the Association of Packaging Manufacturers of Kazakhstan, switching these enterprises to the standard tax regime threatens to impose high accounting costs, unnecessary paperwork, and, ultimately, poses a risk to their survival.

As entrepreneurs note, “forcing such small-scale operations to file a full tax return is nonsense.” They simply cannot handle such changes. We are talking about small and micro-businesses, which are already struggling to cope with rising prices for raw materials and supplies.

What are manufacturers proposing? They propose excluding businesses with small volumes from the prohibited list. Not to impose restrictions based on OKED codes, but to look at actual parameters (revenue volume, presence/absence of VAT, number of employees). And also to preserve the simplified tax regime for microbusinesses, especially those that work on individual orders rather than participating in large tenders and GOST-compliant supplies.

Why is it important to preserve the simplified tax regime for small businesses in the manufacturing sector?

• The simplified tax regime is currently a vital support measure for small-scale manufacturing.
• Removing even a small portion of enterprises from it could lead to higher prices for end products.
• This will hit consumers and also create tax reporting problems for the entrepreneurs themselves.
• Without support for microbusinesses, the industry will simply stop developing, leading to consolidation, monopolization, and the exit of small players from the market.

Following the meeting, domestic manufacturers will consolidate proposals with justifications for the need to exclude certain OKED codes and submit them to government agencies.

Source: atameken.kz