The Kazakhstan-U.S. Investment Forum 7 December 2011 New York, NYWhat Investors Want To Know About Taxation in Kazakhstan By Mr. Daniel A. Witt President International Tax and Investment Center
Kazakhstan has achieved remarkable resultsfrom the economic reforms enacted during its 20years of independence:• Open investment policies• Transformed Kazakhstan Economy• Prosperity for the Kazakh people
The open economic pro-growth policies enactedin the 1990s have made for a better Kazakhstanin this decade.However, the job of reform is not complete. It isan ongoing process.
Kazakhstan needs to make bold and dramaticsteps—to launch a new generation of reforms—ifit is to succeed in attracting this next generationof investment.
TASK 1A new Tax Code has entered into force that hassignificantly reduced major tax rates. Despite thisfact, small and medium-sized business has yet tobecome a stable base for budget revenue.
TASK 2Work continues in the country on reducingadministrative barriers.In the opinion of entrepreneurs, administrativebarriers remain barriers on the road to thedevelopment of their business. For example, theTax Code contains 27 bases for duplicative offschedule tax checks.
TASK 3The RK Code on Administrative Violationscontains standards providing for a significantnumber of administrative penalties and fines, aportion of which lack any economicsubstantiation, are in conflict with the standardsof the Tax Code, or are in unreasonably highamounts negatively affecting the status of thebusiness.
TASK 4The tax authorities widely apply the practice ofblocking company bank accounts.In Russia, for example, the practice involvessuspending operations on the taxpayers accountsonly within the amount owed.What is needed to optimize the practice ofsuspending debit transactions on bank account?
TASK 5A key issue in the relationship between state authorities andthe private sector is to support permanent and effectivedialogue. But is such dialogue possible if the "presumption ofinnocence" of the taxpayer has yet to become a basic principleIn Kazakhstans tax legislationHow can relationships between fiscal authorities and businessbe harmonized and transformed into partnershiprelationships? What measures are needed to improve the taxculture of entrepreneurs?Negotiate and adopt a Taxpayers’ Charter.
TASK 6President Nursultan Nazarbayev has made thestimulation of innovation the top priority in thecountrys economic policy. It is likely that this willrequire adjustments to tax policy, for example inrelation to R&DWhat measures in the area of tax regimes willfacilitate the commercial activities of innovativebusiness and stimulate the implementation ofleading technologies?
TASK 7The existing mechanism for prejudicially disputingthe prescripts of RK tax authorities assumes directsubordination and accountability to the TaxCommittee and is characterized by a lack ofindependent arbiters.Is a mechanism needed for tax appeals to beundertaken by an independent committee (astructure outside of the Tax Committee?
TASK 8As of today, there is no clearly institutionalizedsystem for motivating workers at tax authoritiesthat would stimulate high quality inspections andact as an effective anti-corruption mechanism.
Quantum leap forward with new, investmentwelcoming reforms:• Lower tax burdens• Simple and clear regulatory regimes• Strong protection of property rights