Kazakhstan ranks 64th in Paying Taxes 2020 carried out jointly by PwC and the World Bank Group.
The study has collected data and made analysis on paying taxes for 15 years.
Paying Taxes 2020 is a unique study, which illustrates comparative data of tax regimes based on measures across 190 economies worldwide. It highlights how technology is changing the way taxes are administered and collected using a medium-sized case study company as the basis for comparison. Measures include the:
- total tax and contribution rate (“TTCR”),
- time needed to comply with the major taxes,
- number of tax payments.
In addition, the study indicates measures of two processes based on the post-filing index: a VAT refund and a correction of a corporate income tax (“CIT”) return.
The TTCR of Kazakhstan is 28.4%, as a percentage of the company’s commercial profits. This indicator decreased by 1 % compared to the previous year.
The Kazakhstan indicator (28.4%) compared to other jurisdictions is lower (meaning that the amount of tax borne by the case study company is lower) than the average indicator of the Central Asia and Eastern Europe region (33.0%), and significantly lower the average indicator of the Organization for Economic Cooperation and Development (“OECD”) (40.4%).
Regarding the time needed to comply with major taxes, the Kazakhstan indicator (186 hours) is behind the OECD countries (161 hours). However, it is ahead of most countries in Central Asia and Eastern Europe (average indicator per region – 219 hours).
One of the indicators of the study is the number of tax payments per year. This indicator for Kazakhstan is 10 payments. At the same time, the number of tax payments has increased up to 3 compared to results of Paying Taxes 2016-2018*. For Central Asia and Eastern Europe, the indicator is 13.9 payments, for the OECD – 10.1 payments. The global average is 23.1 payments per year.
The post-filing index for VAT and CIT (now measured for four years) looks at some of the most complex and time-consuming processes for business in general.
Time spent dealing with refunds and responding to questions from the tax authority can disrupt business severely.
EU countries provide a VAT refund in the shortest time, as well as CIT correction procedures which differentiates them from many countries in Central America, the Middle East and Asia Pacific.
The Kazakhstan indicator is 48.9 (out of 100), while the three best performing economies in the Central Asia and Eastern European region (per the World Bank) have achieved the following post-filing index scores: Turkey- 100, Serbia – 93.2, and Israel - 92.
Kazakhstan’s post-filing index for VAT is expected to improve significantly in future years given imminent changes related to VAT refunds (specific VAT accounts administered on Blockchain technology).
Elena Kaeva, PwC Partner considers that Kazakhstan’s overall ranking is expected to improve as other measures are implemented:
- Development of trust between the tax authority and a taxpayer: the taxpayer “bona fides” principle is implemented,
- Tax law becomes simpler and ambiguities are interpreted in favor of business,
- Tax audits become less form driven and there is better understanding of taxpayers’ business models (industry),
- A reasonable time for implementation of new tax related IT systems with a binding moratorium on penalties and fines during the transition (e.g. implementation of Virtual Warehouse provisions),
- Administrative and criminal charges for mistakes/non-compliance consider: issue, taxpayer’s history, intent, size (turnover/taxable income) of the taxpayer’s business, actual damage,
- Communication with taxpayers: periodic updates.
About Paying Taxes 2020
Paying Taxes 2020 is part of the “Doing Business” study which illustrates tax systems of 190 economies using measures such as the total tax and contribution rate, the time to comply with the major taxes, the number of tax payments and the post-filing index.
The study measures world tax systems using a case study company, based on practical scenarios.
The data in Paying Taxes 2020 study relates to the calendar year ended 30 December 2018.
*Notice: Kazakhstan was ranked 56th in the first publication of Paying Taxes 2019. In 2019, there were clarifications in calculations of the study, as a result of which Kazakhstan’s ranking was restated to 60.
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