Emblem
Official Source of the
Prime Minister of the
Republic of Kazakhstan
Menu
Emblem
Close button

Reducing tax burden and increasing salary: How are Five Social Initiatives of Elbasy implemented

Monday, 30 September 2019, 19:04:50

In the spring of 2018, the First President of Kazakhstan, Elbasy Nursultan Nazarbayev addressed the Kazakhstanis with Five Social Initiatives. This is a large program document, which outlines significant and important tasks. PrimeMinister.kz launches a series of reviews on the results of the implementation of the Five Initiatives. In the reviews, we will describe how student dormitories, the main gas pipeline from the Kyzylorda region to the central regions of Kazakhstan, and first of all, to the capital, are built, how many new jobs were created, and how many Kazakhstanis improved their living conditions under the 7-20-25 program, etc.

Today we’ll talk about the results of the implementation of the second initiative of Elbasy — Reducing the Tax Burden to Increase the Wages of Low-Paid Workers.

In order to support working Kazakhstanis with relatively low wages, Nursultan Nazarbayev proposed starting from Jan. 1, 2019, to reduce their tax burden by 10 times — to 1%.

“Reducing the tax burden through an individual income tax should be done for those who receive wages no more than 25 times the minimum estimated figure per month. At the same time, it is necessary that the released funds from such a reduction be directed at increasing their wages. As a result, at least one third of the country's wage earners, more than 2 million people, increase wages without increasing the burden on employers. In the future, the Government needs to explore the possibilities of introducing a progressive income tax scale,” the Five Social Initiatives said.

Implementation mechanism

The Ministry of National Economy was appointed responsible for the implementation of the second initiative.

According to the ministry, in order to implement this initiative, joint work was carried out by government bodies and the Atameken National Chamber of Entrepreneurs.

Based on the results of the work, the procedure for individual income taxation of workers with low wages was determined. Also, amendments were made to the Code of the Republic of Kazakhstan “On Taxes and Other Obligatory Payments to the Budget,” and to the Law of the Republic of Kazakhstan “On Enactment of the Code of the Republic of Kazakhstan“ On taxes and other obligatory payments to the budget ”, which provide for determining the income of an employee not exceeding 25 times the monthly the calculated indicator established by the law on the republican budget and effective on January 1 of the corresponding fiscal year, the application of adjustments to the employee's taxable income is 90% of the amount of such income. This norm entered into force on January 1, 2019.

So, since 2019, an adjustment of 90% of the employee's taxable income is applied if the employee’s income does not exceed 25 MCI, respectively, the employee’s income is above the limit of this adjustment and is subject to individual income tax at a rate of 10%. If an individual will work at several jobs at different employers and at each work the employee's income does not exceed 25 MCI, then an adjustment of 90% of the amount of taxable income of the employee will be applied by each employer.

Thus, taxable income will decrease by 90%. The remaining salary will be taxed at a rate of 10%. That is, the tax burden will be reduced by 10 times.

Consider the proposed calculation of income tax on a simple example for 2019.

Suppose an employee’s salary per month is 63,125 tenge (25 MCI). The amount of mandatory pension contributions in the amount of 10%, that is, 6,313 tenge, is deducted from this amount, and 56,812 tenge remains. 1 minimal non-taxable income is deducted — the minimum non-taxable income is 42,500 tenge. There remains 14,312 tenge, which is taxable income. According to the current mechanism, the tax amount will be 10%, that is 14,312 * 10% = 1,431 tenge.

According to the proposed new mechanism, the tax amount will be reduced by 90%: 14,312 - (14,312 * 90%) = 1,431 tenge. This amount will be taxed at a rate of 10%. Thus, at the rate of 1,431 * 10%, the tax will amount to 143 tenge.

The use of this mechanism involves the instant and guaranteed receipt of additional income by the employee (at the time of receiving the main salary) and will not increase the financial burden on the employer.

At the same time, the administrative costs of the employer are minimized.

In general, workers in the republic will receive additional wages of about 29 billion tenge.

Increasing salaries of employees

Starting from Jan. 1, 2019, in accordance with the order of the First President of the Republic of Kazakhstan, Elbasy, announced in the Address dated Oct. 5, 2018, the minimum wage was increased by 1.5 times or to 42,500 thousand tenge. It should be noted that since Jan. 1, 2018, the size of the minimum wage was 28,284 tenge, in comparison with 2017, its size increased by 15.6%.

The increase in the minimum wage has affected the growth of incomes of more than 1.3 million workers.

According to the Ministry of Labor and Social Protection of the Population, in order to ensure an inter-bit balance of wages for workers, taking into account the increase in the minimum wage and their qualifications, an analysis was carried out to determine the low-paid categories of workers.

The results of the analysis showed that in 2,250 large enterprises up to 1 million workers, as well as in 441 thousand medium and small enterprises, 1.9 million workers receive wages higher than the minimum wage, but lower than the average wage in the country.

At present, the akimats and organizations are carrying out explanatory work for the indicated companies to increase the wages of employees.

Monitoring of the work is carried out by the republican and regional headquarters established under the Ministry of Labor and Social Protection of the Population and akimats.

According to akimats, as of September 1 of the current year, 200 thousand employers in the republic (total number of employees 2.5 million people) increased the salaries of 1.1 million employees, of which 1,916 enterprises are large businesses, 2,910 are medium 195 thousand small businesses.

As the analysis shows, at the above enterprises, the average salary of low-paid workers increased by 31% (from 46.5 thousand to 61 thousand tenge).


News feed
23 November 2020, 23:16
Production of electric vehicles, new plant and access to export markets — development of Kazakhstan's mechanical engineering in a new reality
23 November 2020, 19:27
Prime Minister Askar Mamin chairs meeting of Interdepartmental Commission on COVID-19
23 November 2020, 17:54
Government session to be held Nov. 24 in Ukimet Uyi
21 November 2020, 16:38
Meeting between prime ministers of Kazakhstan and Uzbekistan took place in Turkistan
20 November 2020, 18:25
Askar Zhambakin appointed vice minister of digital development, innovation and aerospace industry
20 November 2020, 18:01
Innovative technologies, electronic documentation and cost reduction: On development of digitalization in healthcare
17 November 2020, 19:37
Interdepartmental Commission approves several decisions on preventing spread of COVID-19 following instructions of the Head of State
17 November 2020, 13:29
The buyer can check legality of goods using mobile application — Yerulan Zhamaubayev
17 November 2020, 13:03
Kazakhstan introduces mandatory labeling of a number of goods — Bakhyt Sultanov
17 November 2020, 11:34
Kazakhstan switches to digital employment centers and distance determination of disability — Ministry of Labor and Social Protection of the Population
17 November 2020, 11:19
Provision of public services in online mode to be brought to 90% until late 2020 — Ministry of Digital Development, Innovation and Aerospace Industry
17 November 2020, 10:02
Government considers issues of labeling and traceability of goods
17 November 2020, 09:48
In 2021, we must completely exclude paper certificates — Askar Mamin
16 November 2020, 15:33
Government session to be held Nov. 17 in Ukimet Uyi
14 November 2020, 12:56
Prime Minister Askar Mamin inspects progress of housing construction in the capital
13 November 2020, 10:43
Working trip to West Kazakhstan Region: Roman Sklyar inspects industrial facilities
12 November 2020, 12:33
Askar Mamin receives new director of Asian Development Bank in Kazakhstan Nariman Mannapbekov
10 November 2020, 18:51
Academic freedom, optimization and ranking — on development of Kazakhstan’s universities
10 November 2020, 11:25
Deposits in banking system at the end of September 2020 increased by 3.3% in a month — National Bank
10 November 2020, 11:17
Lending to economy of Kazakhstan increased by 3.5% compared to early 2020 — Ministry of National Economy
10 November 2020, 10:35
According to results of 10 months of 2020, real sector of Kazakhstan’s economy demonstrates positive growth dynamics
09 November 2020, 16:49
Transit and transport potential, investment growth and new jobs — on development of Mangystau region
09 November 2020, 16:42
Government session to be held Nov. 10 in Ukimet Uyi
09 November 2020, 15:42
Prime Minister Askar Mamin chairs meeting of Interdepartmental Commission on COVID-19
08 November 2020, 09:19
Prime Minister Askar Mamin instructs to stabilize COVID-19 situation in East Kazakhstan Region
07 November 2020, 15:11
Prime Minister Askar Mamin launches implementation of second stage of development of Aktau Saturday resort zone
07 November 2020, 09:59
Prime Minister Askar Mamin holds meeting on sanitary and epidemiological situation in Mangystau region
06 November 2020, 16:38
Prime Minister Askar Mamin holds telephone conversation with Prime Minister of the Kyrgyz Republic Sadyr Japarov
06 November 2020, 16:38
Effective implementation of CIS Economic Development Strategy is crucial — Askar Mamin
05 November 2020, 17:03
Prime Minister Askar Mamin holds telephone conversation with Prime Minister of the Kyrgyz Republic Sadyr Japarov
04 November 2020, 19:27
Interdepartmental Commission: From Nov. 9, 2020, restrictive measures to be introduced in Pavlodar region
04 November 2020, 14:24
Session of Eurasian Economic Commission: Issues of international cooperation and formation of common services market discussed
04 November 2020, 13:52
Establishing roadblocks and restricting operation of facilities — Interdepartmental Commission took measures in Akmola region
04 November 2020, 13:15
Askar Mamin discusses project of tire plant in Saran, Karaganda region, with TATNEFT General Director Nail Maganov
03 November 2020, 16:32
Roman Sklyar visits Uzbekistan: Agreements reached on implementation of joint projects
03 November 2020, 15:09
Solar power plant to be built in Turkistan — Kairbek Uskenbayev
03 November 2020, 11:30
Over 200 thousand fire safety violations identified in Kazakhstan — Ministry of Emergency Situations
03 November 2020, 10:04
About 400 billion tenge of investments attracted to main capital of Turkistan
03 November 2020, 09:58
We need effective emergency warning and response system — Askar Mamin
03 November 2020, 09:49
Kazakhstan will strengthen restrictive measures at state border
02 November 2020, 17:18
Positive dynamics in all indicators — on development of Akmola region
02 November 2020, 14:49
Government session to be held Nov. 3 in Ukimet Uyi
30 October 2020, 16:57
Askar Mamin's trip to Akmola region: Infrastructure, agro-industrial complex, industry and tourism
30 October 2020, 16:24
Yeraly Tugzhanov instructs to take restrictive measures in order to stabilize epidemiological situation in East Kazakhstan region
29 October 2020, 19:14
Yeraly Tugzhanov gets acquainted with readiness of Aktobe and West Kazakhstan regions for possible wave of coronavirus
29 October 2020, 18:47
Prime Minister of Kazakhstan Askar Mamin receives Minister of Foreign Affairs of Kyrgyzstan Ruslan Kazakbayev
28 October 2020, 16:07
Optimizing costs and increasing oil recovery factor — what was done to digitalize energy industry
28 October 2020, 10:54
Working trip to Atyrau region: Tugzhanov inspects preparations of the region for possible wave of COVID-19
27 October 2020, 20:21
Arriving in Kazakhstan with international flights: What you need to know about restrictive measures regarding PCR certificates
27 October 2020, 10:33
From 2021, it is planned to develop three new draft laws — Ministry of Justice
© 2019 - 2020 Press service of the Prime Minister of the Republic of Kazakhstan.
Developed by SoftDeCo.