Kazakhstan Hikes VAT to 16% in 2026, Impacting Businesses and Consumers
Kazakhstan's government has announced a significant change in its Value Added Tax (VAT) system, with a nationwide increase from 12 to 16 percent starting January 1, 2026. This is the first VAT rate hike in over a decade and part of a broader tax reform.
The new VAT rate will impact various sectors. Farmers will see an increase in their deductible input tax, rising from 70 to 80 percent. Meanwhile, businesses and individual entrepreneurs with annual revenue near the new VAT registration threshold of 10,000 MCI (approximately 40 million Tenge) will be directly affected, as the threshold has been lowered from 20,000 MCI.
In an effort to mitigate the impacts of higher prices, especially on essential goods and services, the government has planned targeted relief in the healthcare sector. From 2026, the VAT rate for medical products and services will be reduced to 5 percent, increasing to 10 percent in 2027. This reduction aims to keep essential medicines and basic treatments affordable for patients. Additionally, medical services provided within the state-guaranteed healthcare system or mandatory social insurance will be fully exempt from VAT.
The VAT rate increase is expected to lead to price hikes for food, clothing, and services, disproportionately affecting low-income households. However, the government has taken steps to protect vulnerable populations by maintaining a 0 percent VAT rate for locally printed books and reducing the rate for newspapers and magazines to 10 percent. The full impact of these changes will be felt from 2026 onwards, as the new VAT rate comes into effect.
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