Towards a More Dynamic Economy – Revenue Reform in Kazakhstan

Since 2011, Kazakhstan has carried out several important reforms in revenue and tax administration – all aimed at enhancing tax compliance, reducing the “shadow economy,” and supporting a more dynamic economy. A key element of this reform effort is the Tax Administration Reform Project, designed by the State Revenue Committee of the Ministry of Finance, and supported by the World Bank.

Through assistance from the project, Kazakhstan’s tax administration is streamlining its service delivery, by increasing voluntary tax compliance, minimizing administrative costs, and reducing time and financial costs for taxpayers.

The project is supporting tax administration development and improvements in three overall areas: institutional, operational, and IT infrastructure.

Institutional development means boosting efficiency by improving HR-management practices, with a strong focus on motivation, honesty and integrity.

Operational development comprises re-engineering of business processes, introduction of an automated risk management system, universal filing methodology, and creation of a modern call-center.

Business re-engineering helped reduce the time spent by taxpayers in paying taxes, from 271 hours in 2010 to 186 hours in 2019. And, electronic filing increased from 65% to 99% during the same period.

Taxpayer service centers, equipped with terminals for taxpayers to submit tax reports and e-queue systems, have been opened in all regional centers. These are one-stop shops for taxpayers, where they can get professional advice, receive consultation on opening a business, register as taxpayers, pay taxes, and resolve any tax-related issues.

IT infrastructure development centers around the launch of three new IT systems: e-Invoicing, a Risk Management System, and an Integrated Database.

To date, the e-Invoicing system has generated almost $1 billion extra in VAT revenue, and along with the use of ICT, has helped prevent VAT fraud and evasion, allowing for a more transparent flow of goods.

The Risk Management System evaluates tax reporting and taxpayer’s performance, identifies high-risk areas, and improves the government’s capacity to detect tax abuse cases. In 2019, the system helped generate $204 million in additional revenue for the national budget.

As a critical part of the broader fiscal reforms taking place in Kazakhstan, the Tax Administration Reform Project is helping transform tax administration into a compliance-based, client-oriented, world-class revenue service.