Kazakhstan's tax authorities have begun mass notifications to entrepreneurs after automatically cross-referencing data from government databases, Atameken Business reports.
Tax officials now analyze information from various state databases to identify potential signs of informal employment. The notification itself does not mean a violation has been confirmed, but experts advise not to ignore it.
“If a taxpayer has non-functioning cash registers, it's better to remove them. However, I've seen many businesses using these registers in a limited mode. If an entrepreneur has, say, nine such registers registered in different regions but only one or two employees, that raises questions,” says tax consultant Aidar Masatbayev.
These measures are aimed at combating the shadow economy. Despite stricter controls, the market for private services in Kazakhstan officially shrank by more than 9% last year. EnergyProm experts say this is not due to falling demand but because some businesses may have gone underground. The share of the “gray” market more than doubled over the year, from 6.9% to 14.5%. Analysts attribute this to increased tax burdens on individual entrepreneurs. Tax experts also point to entrepreneurs' fear of tighter oversight.
“People are switching to cash because controls on individuals have been tightened, and not every individual can prove their income sources. Yes, digitalization and administration might drive some out of the shadows, but it's also a scare tactic—people are afraid to use digital tools and start paying cash. And that fuels the shadow economy,” notes tax expert and lawyer Yekaterina Kim.