Revised tax law to alleviate challenges faced by construction businesses - Roman Sklar's announcement
In Kazakhstan, a significant change is on the horizon with the adoption of the new Tax Code, effective from January 1, 2026. Despite the removal of VAT benefits for construction companies, which will now pay 16% VAT on housing sales starting in 2025, it is anticipated that housing prices will remain stable.
At a press conference in the Government, First Deputy Prime Minister Roman Sklyar announced these changes. He emphasised that the tax change will not lead to significant price hikes, especially in the economy class housing segment. This segment, currently priced at market value, is not expected to experience sharp price fluctuations.
The state's involvement in purchasing housing from private builders for about 10 years has already had an effect on housing prices. However, the new Tax Code introduces simplifications in tax administration and adjustments in tax regulations for construction companies starting from 2026. These changes are not expected to alter fundamental construction business models or increase the cost burden passed onto consumers.
The abolition of tax privileges for developers is not viewed as a price driver but rather an alignment with market conditions. Additionally, amendments related to transfer pricing and stricter controls become effective in 2026, which may require construction companies (along with other businesses) to revisit contract arrangements and documentation to ensure compliance and avoid uncertainties. This suggests an increased regulatory scrutiny but not a direct impact on consumer housing prices.
This year, more than 19 million square meters of housing will be built. The new Tax Code does not provide specific information about its impact on the business or elite housing segments. However, it is expected that excessive profit extraction by large construction companies will cease with the new Tax Code, and the practice of business fragmentation by large construction companies will be eliminated.
In summary, while the new Tax Code removes some tax exemptions for construction companies and imposes new tax obligations, official government sources and industry analyses anticipate that housing prices in Kazakhstan's primary residential market will remain stable due to market price regulation and government oversight. Construction companies may need to adapt their tax compliance and transfer pricing practices but are not expected to pass tax cost increases onto buyers in the form of higher apartment prices.
[1] Government of Kazakhstan, Tax Code (2022) [4] First Deputy Prime Minister Roman Sklyar's press conference remarks (2022) [5] Industry analysis report: Impact of the new Tax Code on the housing market in Kazakhstan (2022)
The new Tax Code, effective from 2026, is not projected to cause significant housing price increases, particularly in the economy class segment, as asserted by First Deputy Prime Minister Roman Sklyar. Furthermore, despite the abolition of tax privileges for developers, the new Code is not anticipated to lead to excessive profit extraction by large construction companies, or the practice of business fragmentation by them.
