Tax revenues soar in 2M26 amid VAT reform

KAZAKHSTAN - In Brief 20 Mar 2026 by Evgeny Gavrilenkov

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In 2M26, the republican budget posted a small deficit of about KZT0.9 trln while the full year deficit was targeted at KZT4.6 trln. The 2M26 deficit appeared small, not least because expenditures lagged as about KZT0.9 trln was left unallocated. Hence, in 2M26, expenditures accounted for 14.3% of the annual target. Total expenditures are supposed to reach KZT26.3 trln this year. Despite significantly reduced transfers from the National Fund (considered part of total revenues), total revenues of the republican budget accounted for 15.9% of the annual plan. Tax revenues reached 15.8% of the plan (out of which VAT reached 15.3% of its own target, which was massively raised this year). In February alone, tax revenues grew by 33.7% y-o-y. Note that February is one of four months (in addition to May, August, and November) when tax collection soars due to quarterly payments of certain taxes. Overall, budgetary performance looked good in 2M26 amid an ongoing VAT reform that significantly expanded the tax base. In March, one may expect even greater tax revenue flow due to the ongoing conflict in the Middle East and soaring oil prices. As a result, despite the appreciated tenge, revenues associated with the exchange rate and the oil price could increase as the latter moved up significantly. Local budgets demonstrated less impressive performance, as total revenues reached 15.5% of the annual target, while tax revenues climbed to just 14.9% of their own target. Note that in the first months of each year, tax collection is generally lower than in the following periods. Local budgets spent only 12.4% of the annually planned amount, and the consolidated local budget posted a surplus ...