of September 10, 2022 No. 1005
About approval of the Management concept public finances of the Republic of Kazakhstan till 2030
According to Item 5 of the National actions plan on implementation of the Message of the Head of state to the people of Kazakhstan of September 1, 2021 "Unity of the people and system reforms - strong basis of prosperity of the country", No. approved by the Presidential decree of the Republic of Kazakhstan of September 13, 2021 659, I DECIDE:
1. Approve the enclosed Management concept by public finances of the Republic of Kazakhstan till 2030.
2. Recognize invalid some presidential decrees of the Republic of Kazakhstan according to appendix to this Decree.
3. To the government of the Republic of Kazakhstan, state bodies directly accountable and subordinate to the President of the Republic of Kazakhstan, and other organizations to take the measures following from this Decree.
4. To impose control of execution of this Decree on Administration of the President of the Republic of Kazakhstan.
President of the Republic of Kazakhstan
Approved by the Presidential decree of the Republic of Kazakhstan of September 10, 2022 No. 1005
The management concept public finances of the Republic of Kazakhstan till 2030
Basis for development
The strategy of development for Kazakhstan till 2050,
The national development plan for the Republic of Kazakhstan till 2025,
The message of the Head of state to the people of Kazakhstan of September 1, 2020 "Kazakhstan in new reality: time of actions",
The message of the Head of state to the people of Kazakhstan of September 1, 2021 "Unity of the people and system reforms - strong basis of prosperity of the country"
State body responsible for development of the Concept
Ministry of national economy of the Republic of Kazakhstan
State bodies, organizations responsible for implementation of the Concept
Central and local executive bodies, subjects of the quasi-public sector
2022 - 2030
From the moment of independence finding Kazakhstan passed big way of formation and enhancement of system of the budget regulation.
Number of the significant, interconnected and well thought over reforms in the budget sphere were carried out.
Formation of the budget system and National fund
Creation in 2000 of National fund of the Republic of Kazakhstan (further - NFRK) for the purpose of accumulating of financial resources for future generations by means of saving of oil revenues, and also decrease in dependence of the republican budget on situation in the world raw markets became important reform of the budget system of Kazakhstan. NFRK became the important instrument of maintenance of macroeconomic stability in the country.
Creation of NFRK allowed in the period of "peak" price levels in the raw markets to level external shocks of crises of the 2000th years by means of assignment for implementation of large-scale anti-recessionary programs.
The purposes of the direction of the main amount of oil revenues in NFRK in combination with the fixed transfer in the budget is restriction of influence of volatility of oil revenues for the budget and increase in the budget discipline.
The budget process at all levels of public administration is regulated by the Budget code of the Republic of Kazakhstan (further - the Budget code) accepted in 2008.
The directions of the budget policy, including forming and use of means of NFRK, are determined in the Concept of new budget policy of the Republic of Kazakhstan approved by the Presidential decree of the Republic of Kazakhstan of June 26, 2013 No. 590 (further - the Concept of the budget policy), and Concepts of forming and use of means of National fund of the Republic of Kazakhstan approved by the Presidential decree of the Republic of Kazakhstan of December 8, 2016 No. 385 (further - the Concept of NFRK).
The concept of the budget policy determines vision, the main approaches to forming of fiscal policy till 2020 and the measures aimed at providing complex reforms in the sphere of public finances. In the Concept of the budget policy also rules concerning central government budget deficit and debt are established.
This fiscal basis is enhanced in the Concept of NFRK in which additional rules concerning not oil budget deficit, government debt and the minimum amount of assets of NFRK were established, and also the system of transfers from NFRK in the republican budget is changed.
Since 2017 taking into account the additions made to the Budget code the level of not oil deficit affirms as the law about the third anniversary the republican budget.
Today the budget system of Kazakhstan is based on the budget rules.
The budget rules limiting deficit and not oil budget deficit, and also setting parameters of public debt and lower limit of financial assets of NFRK are necessary for maintenance of stability of public finances.
In 2018-2020 in the Concept of NFRK changes concerning rules on the guaranteed transfer from NFRK were made to the republican budget, to not oil deficit and stabilization of debt.
For the purpose of prevention of replacement of assets of National fund with government debt certain restrictions were introduced.
According to the performance report of the republican budget the size of the guaranteed transfer from National fund in the republican budget in 2019 - 2021 constituted 10, 1 trillion tenge. Following the results of 2021 maintenance expenses and repayment of government debt constituted 17% of the income of the republican budget.
For the purpose of determination of limits of government debt and the debt guaranteed by the state restriction on external borrowing of the quasi-public sector through coordination of their amounts with the Government will be set. This restriction is enshrined in the Budget code.
In 2020 the budget rule regulating the size of the guaranteed transfer from NFRK is enshrined in the Budget code. According to the rule the size of the guaranteed transfer shall not exceed the predicted receipts in NFRK from oil sector in case of stated price of "cutting off" on oil.
Assessment of stability of public finances
In Kazakhstan types of the risks capable to exert impact on national economy are considered by the Government in case of development of the Forecast of social economic development (further - PSER) for the medium-term period which is basis of planning of the republican budget.
Since 2018 as a part of PSER assessment of stability of public finances is represented.
According to experts of the International Monetary Fund, despite disclosure of set of risks in PSER, the operating methods of modeling are limited to the analysis of the narrow range of mechanisms of impact of macroeconomic risks, are built on aspect of the offer in economy. Underestimation of extent of influence of economic shocks on the budget line items results that leads to realization of the budget risks.
At the same time indicators of social and economic development are predicted for five years and parameters of the budget constituted for three years. The requirement for development of the long-term forecasts covering the period more than 10 years is not fixed in the operating system. The observed tendency in other countries connected with demographic indicators, such as aging of the population, increase in birth rate or with climatic changes, is urgent also for Kazakhstan as it has consequences for the economic growth, pension provision programs, health care and social servicing, the taxation and others that will also affect parameters of the government budget.
For the purpose of approach of the operating system of forecasting and planning of the country the publication of the separate document which will become important milestone on the way of further enhancement of work of the Government on the analysis and management of the budget risks and assessment of stability of public finances is recommended for the advanced line of the budget practice by the international experts.
The regulation of the budget legislation (subitem 1-1) of Item 1 of Article 74 of the Budget code) accepted since January 1, 2022 forms the basis for development of the analytical report about the budget risks and long-term stability of public finances which the Government of the Republic of Kazakhstan submits in Parliament of the Republic of Kazakhstan along with the bill on the republican budget for planning period.
For Kazakhstan implementation of management system the budget risks and estimates of long-term stability of public finances is important amendment to the strategic planning applied now in the budget process. Disclosure of the budget risks and assessment of long-term stability will promote determination of balance of costs and benefits in case of adoption of political decisions, will provide understanding of long-term points of pressure.
Strengthening of profitable base of the budget is performed at the expense of the taken measures regarding improvement of quality of tax and customs administration taking into account use of digital technologies as a result of which about 700-800 billion tenges of additional receipts in the income of the republican budget are annually provided. For the last 3 years (2019-2021) the budget already received more 2, 3 trillion tenge of additional receipts (916 billion tenges in 2019, 710 billion tenges in 2020, 683 billion tenges in 2021).
In the forecast of receipts for 2022 at the expense of measures of tax and customs administration and their digitalization additional receipts in the amount of 726 billion tenges are considered that allowed to reduce the level of shadow economy from 27% in 2018 to % 20,2 in 2020 to GDP (% 23,7 in 2019).
Work in this direction will be continued taking into account full functioning in 2022 of National system of the traceability of goods representing complex of information systems.
Besides, taking into account the international experiment by authorized body on budget implementation the project on horizontal monitoring of large business based on remote information interaction of tax authorities with accounts department of large business by agreement of the parties that excludes tax additional accruals and penalties in the future is begun.
According to the current legislation about transfer pricing control is not exercised according to the transactions made at commodity exchange with exchange goods according to the legislation of the Republic of Kazakhstan (further - RK) about commodity exchanges.
For the period 2015-2020 of all 147 inspections on transfer pricing at exporters of strategically important goods (oil, gas, oil products, metals, ores and concentrates, coal, grain) by results of which it is collected in the budget of taxes on the amount of 50 billion tenges are carried out.
Besides, when monitoring transactions for 2019 on the liquefied gas and the grain realized through commodity exchanges of Kazakhstan understating of the prices for 10-25% of market prices in the country of import (Uzbekistan, Tajikistan, Afghanistan) is established.
Also in practice artificial intermediary structures which accept minimum risk in case of the subsequent realization of the exported products are created and are not recognized the interconnected parties.
Such transactions are not controlled by the legislation on transfer pricing, and there is withdrawal of capital from RK.
Mobile applications with convenient and simple functionalities for cardinal simplification of execution of the tax liabilities are started. It is "E-Salyq-Azamat" - for physical persons and since January 1, 2022 "E-Salyq-business" - for individual entrepreneurs.
At the same time in the domestic tax legislation there is wide range of preferences, delays, deductions, changes of payment methods of taxes and other obligatory payments the budget which are privileges.
The analysis of tax benefits and preferences is carried out on permanent basis.
The existing Tax code contains 277 tax benefits.
The amount of these privileges constituted in 2018 - the 4th 511, 4 billion tenges.
By taxes the amount on privileges of the value added tax (further - the VAT) - the 2nd 700, one billion tenges, on the corporate income tax (further - KPN) - 1 786,, on other privileges - 24, 5 billion tenges, i.e. the lion share in structure occupy with 5 billion tenges privileges on the VAT and KPN (% 99,5).
The amount of privileges in 2019 constituted - the 4th 017, 7 billion tenges, in 2020 - the 4th 401, 9 billion tenges. The structure of privileges remained.
The main part from these privileges is to standard, i.e. corresponding international practice.
In 2020 the amount of privileges on the VAT constituted 3rd 153, 4 billion tenges (% 71,6).
The amount of privileges on KPN in 2020 constituted 1 224, 6 billion tenges (% 27,8).
Large number of tax benefits costs the state the considerable amount of the missed income.
Questions of increase in efficiency of the budget system
In 2014-2020 work on increase in efficiency of the budget system was carried out according to the Concept of the budget policy and the Plan of the Nation - 100 specific steps.
Reforms were undertaken in a complex. The main message of reforms in this period are further work on transition from "management of budgetary funds" to "management of results".
In this regard in 2013 the Concept of enhancement of the System of state planning oriented to results was accepted (further - the Concept).
The concept contains the basic principles and approaches on further development of system of state planning so far, and also determines the purposes and tasks of realization of state policy concerning state planning.
The basic principles are need and legitimacy of development of documents of subordinate level depending on the documents standing one level above.
It means that target indicators and indicators of results shall dekompozirovatsya and be determined proceeding from hierarchy of documents of system of state planning.
In turn expenses of the budget shall be directed to achievement of target indicators and indicators of the results established in documents of system of state planning that is to "management of results".
The main approaches to "management of results" assume the following:
the budget is created proceeding from the purposes and results of state policy;
when planning expenses the main attention is paid to reasons for resulting effects within the budget programs;
distribution of budgetary funds between administrators of budgetary funds and (or) the budget programs realized by them is performed in direct dependence on achievement of resulting effects according to the priorities established by program documents of the country;
performance appraisal of administrators of budgetary funds is performed by the achieved results.
Application of the budgeting oriented to result allows:
concentrate budgeted expenses on the priority directions of development of economy;
establish interrelation between the expected results of the budget programs and amount of necessary resources;
increase justification of budgeted expenses;
expand independence of state bodies with increase in their responsibility for implementation of the budget programs.
Since forming of the budget for 2021-2023 financial years, the new system of budgetary planning is implemented.
With implementation of new approaches in budgetary planning the budget process begins not with limits of expenses, and with prioritization of strategic objectives and tasks.
Administrators of the budget programs within the budget request perform efficiency evaluation of the declared expenses on budget investments and the budget subsidies.
Under each ministry the departmental budget commissions which approve the request of administrators on fixed expenses are created. In addition to independence it will increase quality of planning at the level of state bodies.
Thus, by the budget legislation limits of independence of state bodies with simultaneous strengthening of responsibility are considerably expanded.
Changes affected format of submission of the budget statement, report on its execution and their considerations in Parliament. These procedures are accented on achievement of results according to the principle of transition from "management of money" to "management of results".
In case of discussion of the annual statement in Parliament reports of authorized persons, heads of administrators of the budget programs about achievement of straight lines and resulting effects and akims on the target transfers and budget credits received from the republican budget are heard.
In 2021 in the country the new System of state planning was accepted: presidential decrees RK approved National priorities of the Republic of Kazakhstan till 2025 and the National development plan for the Republic of Kazakhstan till 2025.
National projects with integration at the legal framework into the budget process were approved. According to requirements of the Budget code financing of actions of national projects is performed in priority procedure with respect for the principles of the budget system.
System of assessment of results
The budgeting system created in the country oriented to results required further development of system of assessment of results with implementation of new tools of assessment.
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