Kazakhstani entrepreneurs have begun to wind down their businesses due to the introduction of universal income declaration, as experts and businessmen assert

According to the national statistics bureau, the number of registered individual entrepreneurs (IE) in the country decreased by 2.4% in a month, while the number of entrepreneurs grew by 8.5% throughout 2023. The "Voice of the People" editorial team decided to explore how the decline in individual entrepreneurship is related to the introduction of universal income declaration. Could this mean that entrepreneurs will move to the shadow business or close their projects?

"In December, the number of registered individual entrepreneurship entities compared to November 2023 decreased by 2.4% and amounted to 1,719 thousand entities," the department's statistics state.

The number of entrepreneurs also decreased in December - by 1.9% compared to November 2023. Currently, there are over 1.7 million IE subjects and more than 500 thousand legal entities registered in Kazakhstan. The overall annual indicator showed growth. Over the past year, the number of IEs increased by 8.5%, and the number of active legal entities grew by 5.5%.

Source: Data from the stat.gov.kz website

Economist Askar Kysykov believes that the introduction of the declaration will not affect the number of entrepreneurs.

"I don't think that due to universal declaration there will be fewer entrepreneurs or that they will go into the shadow business. The main reasons for the development of the shadow sector are complex tax regimes or illegal activities that cannot be conducted legally," he replied.

At the same time, bureaucracy could dampen the enthusiasm of businessmen.

"After examining the declaration, I realized that it is not so simple to fill out. In the future, it will be difficult for an ordinary Kazakhstani to fill it out. Even with my higher economic education, it was hard to understand some sections. And the declaration format itself requires improvement in the future. However, universal declaration has been postponed for many years and, in principle, this is the first step towards building a taxpayer society in Kazakhstan," Askar Kysykov told the "Voice of the People" editorial team.

He added that tax authorities should assist businesses by providing services that make it easy and convenient for them not to be afraid of paying taxes. According to the economist, it is necessary to increase the coverage of taxpayers through digitalization and new services. The state, according to the economist, must fulfill its part of the deal: to efficiently manage the expenditure part of the budget received into the treasury.

"Year after year, we are promised budget optimization and transparency. It's clear that there are a lot of inefficient expenses in the budget. Therefore, there is a big question for the state: 'How efficiently are the taxes collected from our citizens spent?' That is, if the state demands that everyone pays taxes, then it must work to ensure that the collected money is spent efficiently," the economist added on the effectiveness of the declaration.

By law, the declaration of assets and liabilities for 2023 must be submitted by citizens who are the head, founder of a legal entity, an individual entrepreneur, or their spouse. By 2025, the declaration will become mandatory for all Kazakhstanis.

Entrepreneur Aydana Seitjanova notes that news about the declaration still causes some concerns among entrepreneurs. If taxes increase, then owners of small and medium-sized businesses will have to raise the cost of their services or goods.

"The declaration is inevitable and should not be feared. Businesses were opened in the country before, and they will continue to open. The only thing that concerns entrepreneurs today is the fines. In America, universal declaration is considered a successful practice, but the people were prepared for it over a long time – free training was organized, etc. I hope that this declaration works as intended, not against the people," said the business owner.

Recall, since 2021, Kazakhstan has been gradually introducing new categories of taxpayers into the system of Universal Declaration. The first to start submitting declarations were political and state officials, deputies, top managers of national companies, and their spouses.

However, their declarations are still not available in the public domain. The Anti-Corruption Agency has promised to declassify these documents in 2025.

This text was translated with the help of the artificial intelligence ChatGPT