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Possible Negative Impact of Increasing VAT to 16% on Businesses and Shadow Economy

  • The founder of the Uchet group of companies, Maxim Baryshev, expressed concerns about the possible increase in the shadow economy due to the proposed increase in VAT from 12% to 16%.
  • Baryshev believes that the higher VAT may lead many businesses to resort to “shadow” schemes, which could result in price increases and diversion of funds from investment projects.
  • If the VAT rate is increased, the real GDP growth rate will decrease by 1%.
  • Baryshev suggests that alternative options, such as the 10% VAT rate in South Korea, can create a favorable economic environment and help the country lead globally.
  • He also mentions the successful experience of tax reforms in Kazakhstan in the early 2000s, where the reduction of corporate income tax and VAT contributed to business development and attracted investments.
  • Baryshev believes that reducing the VAT rate to 10% can strengthen the economy, improve the investment climate, and enhance the well-being of citizens.


Note that this post was (partially) written with the help of AI. It is always useful to review the original source material, and where needed to obtain (local) advice from a specialist.


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