The fact is that, according to the draft Tax Code, self-employed individuals will not need to register as individual entrepreneurs, explains the director of the TALAP Center for Applied Research, Askar Kysykov.
This is a significant step towards revitalizing the national economy, as any citizen will be able to engage in entrepreneurial activities without any formalities.
"Since registration as an individual entrepreneur is not required, there is no tax either. Instead, self-employed individuals will make a single payment, but not to the state, rather to themselves." Askar Kysykov
The payment rate will be set at 4% of the self-employed individual's income. This includes mandatory pension contributions (OPV), social contributions (SO), and contributions for mandatory health insurance (VOSMS). As we can see, this payment is not a tax, because the entire amount will be directed towards the individual's pension, social, and health insurance.
It should be noted that the ceiling for monthly income to apply this tax regime will be 1.25 million tenge (340 MRP). If the ceiling is exceeded, the individual will need to register as an individual entrepreneur.
"These are truly favorable conditions. If a self-employed person earns one million tenge and pays 40 thousand from it – they become completely legal, and there will be no claims from the tax authorities against them." Askar Kysykov
At the same time, the self-employed will not need to deal with paper documents. The entire payment procedure will be carried out through mobile applications created by both the government and leading banks. No more declarations need to be submitted by the self-employed citizen.
There is another interesting nuance. If a self-employed person works as a taxi driver through a popular aggregator company, they do not need to make any payments at all – the company is obliged to pay 4% of their income on their behalf, emphasizes Askar Kysykov.
Such a tax has been in place in Russia for a long time, and it has proven to be effective, but our legislative version will be more attractive, the analyst is confident. First, it is simpler; second, the payment amount is lower; and third, in Kazakhstan, the list of activities for self-employed individuals eligible for the preferential tax regime will be expanded.
Today, the draft Tax Code includes the following types of employment for this regime:
- plastering work;
- carpentry and joinery work;
- floor covering and wall cladding work;
- painting and glazing work;
- taxi services;
- freight transportation by road;
- property management for a fee or on a contractual basis;
- photography activities;
- translation (oral and written) services;
- leasing (renting) of premises;
- leasing (renting) of vehicles;
- rental and leasing of entertainment and sports equipment;
- rental of video recordings and discs;
- rental and leasing of other personal consumption items and household goods;
- leasing (renting) of agricultural machinery and equipment;
- leasing (renting) of office machines and equipment, including computing technology;
- services in the field of sports education and leisure organization specialist education;
- educational services in the field of culture;
- services in the field of other education;
- auxiliary educational services;
- activities in the field of art;
- computer and peripheral equipment repair;
- communication equipment repair;
- repair of personal consumption items and household goods;
- hairdressing services;
- manicure and pedicure;
- veterinary services;
- land plot processing services;
- cleaning services for residential premises and household management;
- porter services at markets, train stations;
- manufacturing and repair of musical instruments;
- grazing of domestic animals.
It should be noted that after the abolition of the ECP from January 1, 2024, self-employed citizens of Kazakhstan can choose either to register as individual entrepreneurs (where there are four special tax regimes to choose from) or to submit annual declarations for individual income tax at a rate of 10%.
For reference. As of early 2024, there were about 1.2 million self-employed individuals in Kazakhstan.
To register as self-employed, an individual must meet the following criteria simultaneously:
- not have official employment (based on a contract with an employer);
- not be registered as an individual entrepreneur;
- not register with the employment service for unemployment;
- not hire employees.
If the draft Tax Code passes all approval procedures and is adopted, this single provision for self-employed individuals will allow at least 500,000 workers in Kazakhstan to come out of the shadows, the expert is convinced.