Rise in VAT in Kazakhstan may escalate housing costs
Let's talk about the latest changes in Kazakhstan's tax system and how it'll impact housing prices.
It's no secret that the members of the Mazhilis of Parliament have recently given the green light to the new Tax Code. Among the changes, the value-added tax (VAT) rate was a hot topic. Initially, it was proposed to increase it to 20%, but after some heated debates, it's been set at 16%.
Now, here's where things get interesting. This VAT rate hike might not be great news for the real estate market in Kazakhstan, according to some experts. They believe that this increase will cause housing prices to skyrocket by a whopping 14%.
You might be wondering, why's that? Well, construction companies will now have to shoulder higher costs due to the increased VAT, especially for projects with low margins and economy-class objects. This added expense will inevitably get passed on to consumers.
But it doesn't end there. This VAT increase might lead to higher prices for repairs, furniture, and household appliances too, as they'll be subject to the new rate. This double whammy could mean that housing will become less affordable for Kazakhstanis.
Interestingly, the new Tax Code also ups the individual income tax (IIT) rate to 15% for individuals earning more than 33.5 million tenge per year, affecting foreigners as well, as we reported here.
In case you didn't know, most Kazakhstanis acquire housing through mortgages. Experts have already calculated the minimum wage required to service a housing loan. It'll be interesting to see how this new tax system affects that calculation.
Now, here's a little extra information that might help you better understand the situation. If the VAT rate increases, it could have a domino effect on various sectors. This could strain local businesses and consumers unless the government takes measures to manage it carefully. Indirect support mechanisms for socially vulnerable groups could play a crucial role in keeping housing affordable.
Lastly, it's worth mentioning that recent developments suggest that Kazakhstan might abandon the plan to raise the VAT rate, following directives to focus on improved tax enforcement instead. We'll keep you updated on any more changes to the tax system.
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- The increased value-added tax (VAT) rate in Kazakhstan's new Tax Code might escalate housing prices by 14%, as suggested by some analysts.
- The hike in VAT might lead to a rise in prices for repairs, furniture, and household appliances, making housing less affordable for Kazakhstanis.
- With the VAT increase, construction companies may pass on higher costs to consumers, affecting the housing-market and real-estate sector.
- The new Tax Code has also increased the individual income tax (IIT) rate to 15% for individuals earning more than 33.5 million tenge per year, impacting both locals and foreigners.
- Experts are now calculating the minimum wage required to service a housing loan in relation to the changes in Kazakhstan's tax system, which may influence the affordability of housing for the average citizen.
