(Bloomberg) -- Kazakhstan’s president reiterated a call for a more “just” tax burden on the country’s lenders, which he said were considered among “the most profitable in the world’s resource-rich countries,” as the government struggles to shrink a budget deficit.
Kazakh banks must pay taxes “proportionate to their shareholder dividends,” President Kassym-Jomart Tokayev said during a state-of-the-nation address in Astana on Monday. “We need a new bank law to stimulate economic activity and the further development of the fin-tech sector,” he said.
The large, landlocked country sandwiched between Russia and China boosted budget spending in the aftermath of deadly riots in 2022, which Tokayev called a coup attempt. At the same time, Tokayev has pursued more revenue from higher bank taxes and sought to face down oligarchs, pushing ahead with a law to recover assets deemed to have been acquired illegally.
“It needs to be said clearly that a major miscalculation by the previous and current governments was the failure to implement the revenue side of the republic’s budget,” Tokayev said. “It is unacceptable for this problem to become systemic and hinder development.”
Central Asia’s largest oil producer has yet to follow through on earlier calls for higher taxes on banks, and so far only a few major businessmen have returned large assets to the state. Kazakhstan’s largest lender, Halyk Bank, is controlled by the daughter and son-in-law of Tokayev’s predecessor Nursultan Nazarbayev.
Tokayev also ordered the approval of a new tax code delayed to next year, saying the government needs to make successful fiscal reforms, including by “increasing the efficiency of tax breaks.”
Tokayev repeated that he wants tycoons to spend more capital at home and proposed an amnesty for business leaders who invest in the country’s economy, and added that should be formalized in law.
Those that the state believes have unlawfully acquired their assets “could receive the possibility to make a deal without recognizing the illegality of transferred assets,” he said. “But they must make advances toward the government in terms of directing money to the budget,” and “without bargaining about each tenge.”
Businesses are also “obliged to invest significant money” into the construction of schools, hospitals and other social projects, Tokayev said.
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