Kazakhstan Introduces VAT on Medicines: A Taxing Affair
Introducing Value-Added Tax Expansion for Another Industry in Kazakhstan
Get ready for a shake-up in your pharmacy bills! The Mazhilis, Kazakhstan's lower house of parliament, has approved a new Tax Code, and one of its key changes is the introduction of Value-Added Tax (VAT) on medications.
As things stand, the sale of drugs and medical services are VAT-exempt. But come 2026 and 2027, that's all set to change. Here's the lowdown:
- From 2026, a reduced VAT rate of 5% will be imposed on drugs, medical devices, and services. This rate will swell to 10% the following year.
- Medicines and services offered within the framework of free medical care and compulsory medical insurance will remain VAT-exempt.
- The treatment of rare (orphan) and socially significant diseases, as determined by the government, will continue to be VAT-free.
This means that the 5% VAT will lead to a 5-10% increase in the prices of drugs and medical services from 2026.
The new Tax Code, which will be forwarded to the Senate for further consideration, presents other changes as well. The VAT rate is set to rise from the current 12% to 16%, and the VAT threshold will escalate from 15 million to 40 million tenge.
Items considered socially significant, including food products, domestic books, and services for publishing printed books, will be exempt from VAT. Agricultural producers will benefit from an enhanced ability to offset VAT, decreasing their tax burden.
So, while the move may seem logical, concerns have been raised about the potential impact on basic drugs. Here's a taste of the online debate:
- Nazar: "Honestly, 5% doesn't sound scary, as long as there are exceptions for important areas."
- Beka: "Honestly, I'm a bit worried that drugs will become more expensive, but it's good that free assistance and rare diseases remain protected."
- HasaH: "A difficult solution, but necessary to maintain balance in all areas. At least, essential services should be exempt from tax."
The rising costs and affordability of medications have sparked calls for increased scrutiny of the pharmaceutical sector, with concerns over the exploitation of budget funds and the high cost of drugs—many of which are imported from Russia. Only time will tell if these fears are well-founded. But for now, it's wise to brace yourself for a possible spike in pharmacy bills.
- The introduction of Value-Added Tax (VAT) on medications in Kazakhstan, starting from 2026, is anticipated to lead to a 5-10% increase in the prices of drugs and medical services.
- As a counterpoint to the VAT implementation, items considered socially significant, such as food products, domestic books, and services for publishing printed books, will remain VAT-exempt.
- In the realm of health-and-wellness, the treatment of rare (orphan) and socially significant diseases will continue to be VAT-free, as determined by the government.
- In the shopping scene, the new Tax Code also proposes an increase in the VAT rate from the current 12% to 16%, and an escalation of the VAT threshold from 15 million to 40 million tenge.
- The Price of user-friendly (пользовательского) science in the health-and-wellness field, including the affordability and accessibility of medicines, is a hot topic for debate among Kazakhstani citizens, with concerns about potential business implications for finance and pharmacies in 2026 and beyond.
