The Kazakhstan-U.S. Investment Forum highlighted the need for continuous economic reforms in Kazakhstan to attract investment, including a new tax code that reduces rates but struggles with stability in small and medium-sized businesses. Key challenges include administrative barriers, excessive penalties, and the practice of blocking company bank accounts, which hinder business development. To foster a better investor environment, recommendations include improving tax culture, establishing a taxpayer's charter, stimulating innovation through adjusted tax policies, and creating an independent tax appeal mechanism.

1. The Kazakhstan-U.S. Investment Forum
7 December 2011
New York, NY
What Investors Want To Know About
Taxation in Kazakhstan
By Mr. Daniel A. Witt
President
International Tax and Investment Center

2. Kazakhstan has achieved remarkable results
from the economic reforms enacted during its
20
years of independence:
• Open investment policies
• Transformed Kazakhstan Economy
• Prosperity for the Kazakh people

3. The open economic pro-growth policies
enacted
in the 1990s have made for a better
Kazakhstan
in this decade.
However, the job of reform is not complete. It
is
an ongoing process.

4. Kazakhstan needs to make bold and dramatic
steps—to launch a new generation of
reforms—if
it is to succeed in attracting this next
generation
of investment.

5. TASK 1
A new Tax Code has entered into force that has
significantly reduced major tax rates. Despite this
fact, small and medium-sized business has yet to
become a stable base for budget revenue.

6. TASK 2
Work continues in the country on reducing
administrative barriers.
In the opinion of entrepreneurs, administrative
barriers remain barriers on the road to the
development of their business. For example, the
Tax Code contains 27 bases for duplicative off
schedule tax checks.

7. TASK 3
The RK Code on Administrative Violations
contains standards providing for a significant
number of administrative penalties and fines, a
portion of which lack any economic
substantiation, are in conflict with the standards
of the Tax Code, or are in unreasonably high
amounts negatively affecting the status of the
business.

8. TASK 4
The tax authorities widely apply the practice of
blocking company bank accounts.
In Russia, for example, the practice involves
suspending operations on the taxpayer's accounts
only within the amount owed.
What is needed to optimize the practice of
suspending debit transactions on bank account?

9. TASK 5
A key issue in the relationship between state authorities and
the private sector is to support permanent and effective
dialogue. But is such dialogue possible if the "presumption of
innocence" of the taxpayer has yet to become a basic
principle
In Kazakhstan's tax legislation
How can relationships between fiscal authorities and business
be harmonized and transformed into partnership
relationships? What measures are needed to improve the tax
culture of entrepreneurs?
Negotiate and adopt a Taxpayers’ Charter.

10. TASK 6
President Nursultan Nazarbayev has made the
stimulation of innovation the top priority in the
country's economic policy. It is likely that this will
require adjustments to tax policy, for example in
relation to R&D
What measures in the area of tax regimes will
facilitate the commercial activities of innovative
business and stimulate the implementation of
leading technologies?

11. TASK 7
The existing mechanism for prejudicially disputing
the prescripts of RK tax authorities assumes direct
subordination and accountability to the Tax
Committee and is characterized by a lack of
independent arbiters.
Is a mechanism needed for tax appeals to be
undertaken by an independent committee (a
structure outside of the Tax Committee?

12. TASK 8
As of today, there is no clearly institutionalized
system for motivating workers at tax authorities
that would stimulate high quality inspections and
act as an effective anti-corruption mechanism.

13. Quantum leap forward with new, investment
welcoming reforms:
• Lower tax burdens
• Simple and clear regulatory regimes
• Strong protection of property rights

14. Thank you