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Kazakhstan is set to make essential medicines more affordable for its citizens by eliminating Value Added Tax (VAT) on socially significant and rare medications. This move is expected to curb rising drug prices and significantly improve access to vital treatments for the population.

Key Tax Relief for Pharmaceuticals

A significant development for the pharmaceutical market has been the signing of a protocol that resolves long-standing disputes regarding the tax burden on medicines and medical devices. Deputy Prime Minister and Minister of National Economy, Serik Zhumangarin, has mandated the exemption of VAT for rare and socially important drugs. This tax relief will apply across the entire supply chain, from manufacturers to the final point of sale in pharmacies.

Strategic Move for Public Health

Timur Zharkenov, Deputy Chairman of the National Chamber of Entrepreneurs "Atameken," hailed the decision as a strategic step in ensuring the nation's drug security. He emphasized that this initiative not only supports businesses but also prioritizes the interests of patients. By removing tax burdens at various stages, the aim is to ensure that the cost of essential medicines is not subject to fiscal fluctuations.

New Pricing System Introduced

Further enhancing affordability, a new pricing system will be implemented. Under the new protocol, the maximum prices for medicines and medical devices will be determined without factoring in VAT. This measure aims to prevent a situation where taxes are added on top of taxes, making essential medications prohibitively expensive for vulnerable populations.

Streamlining Imports and Production

The issue of raw material imports has also been addressed. Manufacturers will now be able to utilize tax benefits by confirming the intended use of drug substances and bulk products, which are ready-made components for further production. This is expected to provide a boost to domestic pharmaceutical plants that rely on foreign components.

Reducing Bureaucratic Hurdles

Bureaucratic obstacles at customs are also being tackled. A 4-digit TN VED code will be used for diagnostic reagents and consumables. Previously, ambiguous formulations in the list of exemptions led to disputes with tax authorities and caused delivery delays. This simplification is expected to streamline the import process for critical medical supplies.

Timeline for Implementation

These reforms are being implemented in close dialogue with government bodies. The Ministry of Health, in conjunction with the Ministry of Finance and the Ministry of National Economy, has been given three weeks to introduce amendments to several government decrees. By early spring, the regulatory framework, including rules for price and markup regulation, is expected to be fully updated. This comprehensive approach aims to ensure that life-saving medicines remain accessible to the average consumer.