Expert Kysykov: VAT increase in Kazakhstan will lead to higher prices and inflation

A possible increase in VAT in Kazakhstan from 12% to 20% will lead to higher prices, lower real incomes and higher inflation. This forecast was made by Askar Kysykov, director of the Talap Center for Applied Research, on the Rossiya 24 TV channel.
The Government of Kazakhstan is discussing tax reform in order to solve the problem of the state budget deficit. The reform involves an increase in VAT from 12% to 20%. According to the calculations of the authors of the project, the measure will allow to send an additional 6-7 trillion tenge to the treasury.

"There are certainly risks. First of all, they are associated with rising prices and falling real incomes of the population. Inflation in Kazakhstan remains high. Last year, it was almost 9%, and tariffs made the main contribution. And an increase in the VAT rate will become such an additional factor in price growth, and, according to estimates, an increase in the VAT rate to 20% will accelerate inflation by another 5-6% plus," Kysykov said.

The expert added that the measure will have a strong impact on the state of entrepreneurship and business activity in Kazakhstan.

Kysykov also believes that the reform will not solve the problem of budget deficit.