Negative Impact of 20% VAT Increase on Small Business: A Case Study and Future Outlook

• VAT rate increase from 12% to 20% on January 31, 2025
• Example of consequences for a business owner in the electrical installation industry
• Monthly income of 750,000 tenge per object, servicing 7 objects
• 2 employees with a total monthly salary of 515,000 tenge
• Simplified tax rate of 3%
• Monthly expenses of 28,000 tenge on consumables
• Profit of 184,500 tenge and profitability of 24.6%
• With VAT rate at 20% and turnover tax at 4%, profit drops by almost 7 times
• Business owner will operate at a loss due to increased costs and prices
• Negative impact on small and medium-sized businesses, leading to bankruptcy or operating in the shadow economy

Source: uchet.kz

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.

---

---