The issue of replacing the value added tax (VAT) by sales tax was set aside

Cascade method of levying sales tax is not being used in the developed world, and Kazakhstan does not need to become a "pioneer" in this issue, said the deputy chairman of the National Chamber of Entrepreneurs "Atameken" Rustam Zhursunov.

The Ministry of National Economy is developing a draft law, which will combine the Tax and Customs Codes. One of its major reforms, which is now being discussed in Kazakhstan - is replacement of VAT with a sales tax. "I've never heard of a cascade method of levying sales tax. We expressed our concern and pointed to a number of very serious shortcomings ", - said Mr. Zhursunov during a press conference at the office of the Central Communications.

NCE approached this question with all seriousness: they created an economic model by taking concrete producers, sales chain and calculated that the introduction of this innovation will affect businessmen and end users. The results, according to Mr. Zhursunov, force to think about the correctness of the implementation of this type of tax. A liter of milk with 5% rate of sales tax will increase in cost growth by 9%. As for gasoline A-92 cost increase is 9%, phosphorus - 13%, poultry meat - 10%, kilowatts of electricity - 4%. "By all measures, we see a rise in the cost of domestic goods, works and services from 9 to 15%", - said the deputy chairman of NCE during the press conference in Astana.

This summer at the reporting meeting before the population the head of the Ministry Kuandik Bishimbayev clearly outlined the position of the body: "In general, our ministry's position is to support the business, and in no case to enter the regime that is inconvenient today. We see problems with the sales tax in the form, which was offered (the cascade method), it can lead to more expensive production costs, as well as going of entrepreneurs to the shadow. Therefore, the working group decided today not to move it forward", - said Mr. Bishimbayev, adding that a final decision will be taken at the Government level.

In May of this year, as noted it by Mr. Zhursunov, the suspension of this initiative was announced. This, according to him, only for the best, since the sales tax by the cascading method is full of negative effects. "First, it is the growth of costs. This means that the competitiveness of our exporters will clearly worsen, because at foreign markets the prices for metals, oil and other things are dictated by the market. Secondly, it will be less profitable to produce it than to import it. Accordingly, the importers will win, rather than producers. In the absence of the creditable part of the VAT will happen leaching of the national economy – we have also noted it", - argued Mr Zhursunov.

Question of combining tax and customs codes, as well as the issue of replacing VAT with a sales tax, according to him, is suspended. After a failed attempt to replace the VAT with the sales tax, the Government focused on the collection of value added tax within the framework of the draft law on amendments and additions to the Tax Code. "As for VAT, you will remember that in the middle of last year there have been heated discussions, when on the initiative of the Ministry of National Economy was announced a reduction of the threshold for mandatory VAT registration from 30 thousand MCI to three thousand MCI. A year ago, we have also expressed concern because tenfold decrease - of course, means  increase of the number of taxpayers, the increase of liabilities in the form of tax reporting and payment, the tightening of the administration", - said during a press conference the deputy chairman of NCE.

Given these factors, NCE proposes a phased reduction of the threshold for VAT payers. The draft law, which was developed by the Ministry of National Economy, which will soon be submitted to the Mazhilis, it is proposed to retain the current minimum threshold for VAT registeration: "In 2017, the threshold will remain at the level of 30 thousand MCI (64 million tenge), 2018 it will be lowered to 25 thousand MCI (53 million tenge), in 2019 - 20 thousand MCI (42.4 million tenge), and in 2020 -up to 15 thousand MCI (31.8 million tenge). This is true, because the reduction in the VAT threshold is an important issue", - said Mr. Zhursunov.

Deputy Chairman of NCE has compared this figure with the global figures. So, if to take a current exchange rate 378 tenge per 1 euro, in Kazakhstan the current VAT threshold is 168 thousand euros, Russia- 26 thousand euros, in Belarus - 40 thousand euros, in Kyrgyzstan - 56 thousand euros.  And in developed countries, such as Sweden, the Netherlands, Germany, Belgium – there is no threshold. In Norway, Denmark and Finland it varies from 6 thousand euros to 8.5 thousand euro. "In Kazakhstan, the threshold is several times higher, and in fact it is not conducive to the development of taxation", - he concluded.