Kazakh grain traders are concerned about new VAT refund rules: they are now expected to be reimbursed only 20% of the tax paid. Many market participants believe this will lead to losses for trading companies and lower purchase prices from grain producers.
The amendments were made to the Tax Code, which came into effect on January 1. According to traders, when purchasing products from agricultural producers, exporters must now pay VAT at a rate of 16%, after which 20% of the tax paid will be credited. This provision is stipulated in Article 484 (subparagraph 7, paragraph 2 and paragraph 5) of the Tax Code. The remaining 80% of VAT is non-refundable.
Traders note that the remaining tax burden—12.8% of the product value—may be passed on to the buyer, but in this case, the price of Kazakh grain on foreign markets will increase, and the grain may become uncompetitive.
To avoid this, the increased tax burden will be transferred to the domestic market, leading to lower purchase prices from farmers. Industry associations estimate that farmers could lose 120 billion tenge in the coming calendar year as a result of these changes.
Industry organizations are asking the Atameken National Chamber of Entrepreneurs to look into this issue and initiate a proposal to revise the new tax provision.