Republic of Kazakhstan: Selected Issues
IMF Staff Country Reports, February 7, 2020
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- Republic of Kazakhstan: Selected Issues
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Bibliographic details
- Published: February 7, 2020
- Series: IMF Staff Country Reports
- DOI: https://doi.org/10.5089/9781513529288.002
Executive summary
- The paper conducts a review of taxes on labor in Kazakhstan, focusing on personal income tax and other taxes on labor.
- Labor taxes currently have a relatively low level of collections but have the potential to become an important source of non-oil fiscal revenue.
- These taxes have limited responsiveness to oil-sector fluctuations and thus help enhance the resilience of public finance to oil shocks.
- The existing labor tax system is characterized by:
- a low, flat headline rate;
- limited progressivity except at the lower end of household income distribution due to deduction of the minimum wage;
- a relatively high tax burden mainly borne by the formal sector.
Findings on burden, progressivity, and efficiency
- Effective burden: Labor taxes exhibit a relatively low headline rate but create a relatively high tax burden largely concentrated in the formal sector.
- Progressivity: The system shows limited progressivity overall; an exception is increased progressivity at the lower end of the household income distribution stemming from deduction of the minimum wage.
- Efficiency and resilience:
- Labor taxes are found to have limited responsiveness to oil-sector fluctuations.
- This limited responsiveness contributes to enhancing the resilience of public finances to oil shocks.
Policy recommendations
- Implement a targeted strategy for deductions and exemptions to improve equity and efficiency.
- Expand the tax base to increase non-oil fiscal revenue.
- Continue improvements in tax design, administration, and collection enforcement to raise revenue and fairness.
Content in this bundle
- Republic of Kazakhstan: Selected Issues; IMF Country Report No. 20/38; December 19, 2019