The increase in Value Added Tax (VAT) from 12% to 16% has raised costs by 4.6 billion tenge for 13,181 Kazakhstani farms holding lease agreements with KazAgroFinance JSC. Deputies from the "Adilet" party stated that the imposition of penalties on compliant taxpayers for tax discrepancies jeopardizes the fulfillment of the President's directive to renew agricultural machinery by 8–10% annually.
"In his 2023 Address, Kassym-Jomart Tokayev warned that despite the immense potential of the agricultural sector, we are unable to fully utilize it. One of the industry's major challenges is the aging of the machinery and tractor fleet. Currently, 80% of agricultural machinery is worn out. Consequently, a target was set to renew the machinery fleet by 8–10% annually," Erbol Danagulov, a deputy from the "Adilet" party, said today at a Kurultai meeting.
He noted that farmers currently receive support through concessional loans at a 6% interest rate and leasing programs, which provides some opportunity for renewing machinery in the sector.
However, there is an issue negatively affecting the effectiveness of these measures.
With the entry into force of the new Tax Code, the Value Added Tax rose from 12% to 16%. This change increased costs for farmers who had leased machinery.
"The tax burden for the 13,181 farms that acquired machinery through KazAgroFinance JSC increased by 4.6 billion tenge." "Levying penalties on tax differentials for farmers who are timely repaying the principal debt according to the established schedule places an additional burden on their financial position," said Danagulov.
He noted that the objectives of the tax reform and the support measures for the agricultural sector must be aligned. On one hand, the state offers concessional financing for fleet modernization; on the other, tax changes should not undermine the effectiveness of this support.
In light of this, the party requests that the Ministry:
1. Review contracts concluded under KazAgroFinance JSC leasing terms to align them with the logic of the tax reform;
2. Consider applying transitional rules for this period;
3. Take comprehensive measures to help the agricultural sector adapt to the new stage of the tax reform.