Kazakhstan May Reclassify Construction Entrepreneurs as Self-Employed: Will Housing Get Cheaper?

Kazakhstan is discussing a proposal to reclassify individual entrepreneurs working in construction as self-employed. The head of the Construction Committee at the Ministry of Industry said the agency is exploring the possibility, but according to him, it will not affect the cost of housing under construction, reports infohub.kz.

During a briefing at the Central Communications Service, journalists highlighted the difficulties individual entrepreneurs face in the construction sector. They are forced to switch to a more complex tax regime because their clients—larger developers—cannot deduct the cost of subcontractor services under the simplified regime when calculating corporate income tax. Experts estimate this drives up housing costs.

The Association of Developers previously proposed including 12 types of construction activities in the list permitted for self-employed individuals. Media representatives asked whether the Ministry of Industry is considering such a measure.

Bakhytzhan Zhunisbekov, Chairman of the Committee for Construction and Housing and Utilities at the Ministry of Industry and Construction, confirmed that the agency is indeed reviewing the proposal.

"First of all, it must be understood that this mechanism will not affect the cost per square meter. Why? Because in any case, the developer, as a taxpayer, will pay VAT in full. Whether they work with a non-taxpayer or a taxpayer—it doesn't matter. Second, the work is ongoing. Yes, that's correct, such proposals have been received," Zhunisbekov noted.

According to the committee head, they have not yet received the Ministry of Economy's position on the matter, and the proposal to include construction workers among the self-employed is still under review.

Earlier, the Union of Builders of Kazakhstan said the number of individual entrepreneurs engaged in construction is declining in the country. Over a year, their number decreased by about 11%. This was linked to tax changes in working with large construction companies. According to Vyacheslav Lazarev, deputy president of the Union of Builders of the Republic of Kazakhstan, the share of contractors operating under the simplified regime in the structure of construction companies may range from 15% to 50%. He also said this led to a 10-15% increase in the cost of work.