Import Dumping or Tax Reform: How Toleutai Rakhimbekov Proposes Saving Kazakhstan’s Processing Industry

At a meeting of the National Kurultai, President Kassym-Jomart Tokayev raised a critically important issue for the country’s food security: domestic agricultural processors are operating under conditions of unequal competition. The main challenge is aggressive imports of subsidized products from EAEU countries, which are effectively pushing Kazakh businesses out of their own market.

Agricultural expert Toleutai Rakhimbekov, analyzing the current situation, emphasizes that the key factor behind the expansion of foreign producers — primarily Russian companies — is the low production cost of their goods. This advantage allows them not only to dominate shelves in Kazakh retail chains but also to hinder the development of domestic production.

According to the analyst, correcting this imbalance requires the state to radically revise its approach to supporting the sector by creating conditions identical to those enjoyed by competitors within the economic union.

To address the problem systematically, two key instruments are proposed:

1. Direct subsidization of raw material production.
The expert insists on payments to agricultural producers at the moment products are shipped. The mechanism should cover all channels: deliveries for processing, exports, and the domestic market. Particular attention should be paid to segments with critically high import shares, especially fruits and vegetables.

2. Complete exemption from VAT.
Instead of selective benefits, Rakhimbekov proposes fully excluding value-added tax from the entire chain — “production, processing, distribution, export/import.”

It is important to note that the transfer of VAT payment obligations from processors to retail chains, which came into effect on January 1, 2026, did not provide the expected relief. The expert explains that the tax still remains embedded in the final price of goods, ultimately burdening consumers and reducing the competitiveness of domestic products.

Beyond direct business support, abolishing VAT could become a powerful tool for market legalization. According to the expert’s estimates, the share of the “shadow” sector in agricultural product turnover exceeds 70–75%.

Expected effects of the proposed measures include:

— Elimination of intermediaries: a direct link between farmers and processing plants would make the activities of “grey” dealers economically unviable.
— Price reduction: removing VAT from production costs would directly translate into lower prices for consumers.
— Export expansion: equalizing conditions with Russian counterparts would enable Kazakh enterprises to scale production more effectively and compete in foreign markets.

Thus, the transition to direct subsidization and a simplified tax regime is seen as the only way not only to preserve domestic processing but also to give it a strong impetus for qualitative growth.