Authorities Revise VAT Refund Rules for the Agricultural Sector

Kazakhstan will abolish the rule requiring adjustment of input VAT amounts for agricultural product exporters. The decision was made during a meeting of the Project Office for the implementation of the new Tax Code, chaired by Deputy Prime Minister and Minister of National Economy Serik Zhumangarin.

The meeting reviewed one of the most debated provisions of the new Tax Code concerning the application of VAT incentives for agricultural products, aquaculture products, and commercial fishery products used in transactions subject to a zero VAT rate. The provision in Article 484 of the Tax Code stipulated an 80% reduction in the amount of VAT eligible for credit on such products when exported.

During discussions, industry associations, agricultural producers, and exporters emphasized that maintaining the mechanism for full VAT reimbursement on export supplies would provide additional support to the agricultural sector and help preserve the competitiveness of Kazakh products in foreign markets.

As a result of the meeting, it was decided to eliminate the adjustment of input VAT amounts for agricultural exporters. Consequently, the relevant provision of Article 484 will be removed.

The validity of VAT refund claims will be verified through tax audits using the so-called “pyramid method.” This mechanism allows authorities to trace the entire chain of product movement and tax payments, from the agricultural producer to the exporter. If the audit confirms compliance, exporters will be entitled to receive a full refund of previously paid VAT.

It is noted that when the VAT adjustment provision was introduced, a separate benefit for agricultural producers was expanded: the reduction of VAT payable to the budget was increased from 70% to 80%. Since the existing export VAT refund mechanism will remain in place, it is proposed to restore the previous benefit level of 70%.

In addition, the State Revenue Committee and the National Bank are developing a mechanism for using the digital tenge in VAT refunds. The implementation of this tool is expected to be completed by the end of the year. The initiative is primarily aimed at exporters and is expected to significantly reduce VAT refund processing times.

The use of the digital tenge will be entirely voluntary. Businesses will be able to choose between the current VAT refund procedure and the new mechanism.

According to Serik Zhumangarin, the decision took into account proposals from industry associations, agricultural producers, and exporters. He noted that the chosen approach will preserve existing support measures for farmers, provide predictable business conditions for exporters, and maintain the competitiveness of Kazakhstan’s agricultural products in international markets.