Kazakhstanis to get around 29 bln tenge of extra wage
A new mechanism of taxation will be launched January 2019.
Kazakhstani employees will receive about 29 billion tenge of extra wage,” BNews.kz Ministry of National Economy of the Republic of Kazakhstan informed according to BNews.kz correspondent.
The Ministry of National Economy has assigned the second direction: "Reducing the tax burden to increase the wages of low-paid employees."
According to the second initiative it is proposed to reduce personal incomes tax (PIT) ten times for the employees with the wage of less than 25 monthly calculated indicators (MCI) or 60 125 tenge
More than two million people in the republic get such wage, in agriculture and trade industries particularly. For the purpose of this initiative realization, public authorities and Atameken National Chamber of Entrepreneurs of Kazakhstan carried out joint actions resulting in the identification of an optimal mechanism for taxation of workers with low wages.
Thus, taxable income will be reduced by 90%. The remaining wages will be taxed by the PIT at a rate of 10%. That is, the tax burden will be reduced by 10 times.
For example, month wage of the employee is 60.125 tenge (25 MCI). From this amount will be deducted
The compulsory pension contributions at a rate of 10%, that is 6013 tenge will be withheld from this amount. It remains 54 112 tenge. Then 1 minimum wage - the minimum non-taxable income 28 284 tenge is withheld as well. Balance is 25 828 tenge, which is taxable income (TI). Under the current mechanism, the amount of tax will be 10% of the TI, that is 25,828 * 10% = 2583 tenge.
"According to the submitted new mechanism, the TI will be reduced by 90%: 25 828 – (25 828*90%)=2 583 tenge. This amount will be taxed at the PIT rate of 10%. Thus, at the rate of 2583 * 10% PIT will be 258 tenge," the representative of the ministry explained.
This example demonstrates the tax sum will be reduced ten times from 2583 up to 258 tenge, herewith wage will increase additionally by 2325 tenge.
The ministry’s representative commented this mechanism provides for instant and guaranteed receipt of extra wage by the employee (at the time of receiving the basic wage) 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 an additional wage of around 29 billion tenge.
Corresponding amendments to the tax legislation are provided for in the Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on Social Security" signed by the Head of State on July 2, 2018.
This mechanism will be launched on January 1, 2019.