Taxes for high earners will increase in Kazakhstan

A second package of amendments to the tax legislation was proposed by the Kazakh Ministry of National Economy on April 25, including a proposition to increase the individual income tax rate for high earners.

The Ministry of National Economy stated that citizens with lower incomes will pay personal income tax at a lower rate than high-paid workers, without specifying the exact income levels that will be subject to the higher rate. However, Minister Serik Zhumangarin proposed to introduce an increased rate of 15% for employees with annual income exceeding 8,500 monthly calculation indices (MCI).

Currently, they value one MCI in Kazakhstan at 3,932 KZT ($7.64), but there are plans to rise it to 4,129 KZT ($8) by 2026, due to coming into force of the new Tax Code. These figures let calculate the threshold for the increased personal income tax rate starting at 35 million KZT per year (approximately $68,000) or 2.9 million KZT per month ($5,600) in 2026.

Nevertheless, they will tax at the increased 15% rate only the portion exceeding the 2.9 million KZT threshold. The tax rate for the income up to that threshold will remain standard (10%).

With the introduction of a progressive scale, the Ministry of National Economy hopes to increase tax revenues by 70 billion KZT per year (approximately $13.5 million).

Additionally, optimizing deductions for medical, education, and social contributions were also proposed by the ministry. They will introduce a single basic deduction of 30 MCI per month instead of the current deduction of 14 MCI and eliminate all additional deductions in order to simplify accounting procedures and reduce the administrative burden for individuals and employers.

Currently, a portion of employees’ salary equivalent to 14 MCI, or about 55,000 KZT ($106), can be exempted from taxation, upon request. The proposed changes, starting in 2026, will change this amount to 123,800 KZT ($239) per month.

There was also a proposition to strengthen liability for violations related to compulsory social and health insurance and the use of special tax regimes. Totally, 71 amendments to the draft new Tax Code and related legislation have been proposed by the government, along with 67 amendments to the current Tax Code.

According to the previous report of the Times of Central Asia, the Mazhilis (the lower house of the Kazakh parliament) approved the draft of the new Tax Code in its first reading in early April. However, debates about the proposed reforms continue, as well as criticism from deputies, experts, and entrepreneurs.

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