Kazakhstan plans to ban cash purchases of apartments

The ministry plans to ban cash purchases of apartments, Deputy Prime Minister and Minister of National Economy Serik Zhumangarin recently told the Taldau Talks podcast.

“Each residential complex is a separate limited liability company, and although the parent company acts as a brand, all sales are made through individual entrepreneurs. Therefore, we are now going to solve this problem within the framework of the tax law. Construction companies must sell (apartments) in the form of B2C (i.e. business to consumer) and by bank transfer.” – Serik Zhumangarin said.

Serik Zhumangarin said the construction industry needs to be rectified because the government has invested a lot of money in it.

The draft revised tax law proposes to impose a 12% value-added tax on construction companies. Currently, construction companies are tax-free.

“Builders are worried and they proposed to us (the government) an alternative tax – infrastructure tax: $40-60 per square meter, depending on the category of construction. In principle, this is an alternative. But frankly, we are more worried about the sale of these apartments than the tax.” – said Serzek Zhumankharin.

Podcast host and Senate Speaker Maulen Ashimbayev asked whether the increase in taxes would lead to an increase in apartment prices in Kazakhstan. The Minister of Economy answered in the affirmative.

Ashimbayev added that this is a sensitive issue that needs to be discussed with lawmakers. Chairman of the Atameken Union of Entrepreneurs Rembek Batalov agreed with the Senate Speaker and noted that the construction industry has a multiplier effect on the economy, but he also stressed that there is indeed a large gray market in the industry, which needs to be addressed.

Earlier, Deputy Minister of the National Economy Azamat Amrin said that the collection of VAT is important to combat the shadow economy. Previously, VAT-exempt developers were not registered as taxpayers and did not offset the “input” VAT that was included in the cost of goods and services from their suppliers. After the reform, developers will have an incentive to offset the “input” VAT, which will require them to more strictly monitor their counterparties and suppliers and verify their legitimacy.