How VAT will be applied in public procurement starting January 1, 2026

A new Tax Code will come into effect in Kazakhstan on January 1, 2026. In this regard, the Ministry of Finance of the Republic of Kazakhstan clarifies the procedure for accounting for value-added tax when planning and executing public procurement.

According to the Law "On Public Procurement" dated July 1, 2024, annual public procurement plans are formed on the basis of approved budgets and individual financing plans. In accordance with the Public Procurement Rules, annual plans are are prepared excluding VAT, including a preliminary annual plan and the amount of advances.

Moreover, the terms for paying VAT and excise taxes are reflected not in the plan, but directly in the contract concluded following the procurement process. This complies with tax and customs legislation.

The Tax Code stipulates that VAT is levied on the sale of goods, works, and services, and the date of completion is the date of transfer of the goods or the signing of the certificate of completion of works or services rendered. Effective January 1, 2026, the VAT rate is 16% and applies to all taxable sales, including those under previously concluded contracts.

Suppliers who  are VAT payers are required to issue invoices in accordance with the requirements of the Tax Code. If the supplier changes the status of the VAT payer, the Law allows amendments to the public procurement contract in terms of adjusting the contract amount for the corresponding tax amount. At the same time, the quality and terms of delivery remain unchanged.

The public procurement web portal automatically takes into account the status of the supplier and generates the VAT amount for the contract, and also provides for the division of the cost by item into taxable and non-taxable VAT.

Thus, starting from January 1, 2026, when executing government procurement contracts, a VAT rate of 16% is applied, regardless of the date of conclusion of the contract, if the supplier is a VAT payer at the time of turnover.

The task of the Ministry of Finance of the Republic of Kazakhstan is to make the application of VAT in public procurement as transparent and understandable as possible for all participants. For this, the web portal of public procurement has been technically improved. The system now automatically determines whether the vendor is a VAT payer and adjusts the total amount of the contract. This approach is designed to eliminate possible discrepancies, reduce the number of disputes and ensure uniform application of tax legislation.