At first reading, Kazakhstan’s Majilis (lower house) deputies supported a bill on amendments to the Tax Code affecting the taxation of mining.

The changes include introducing differentiated tax rates for mining activities. According to Economy Minister Alibek Kuantirov, the measure aims to “balance the load and discourage its own electricity consumption”.

“The lower the electricity cost, the higher the wage rate,” he said.

According to the document (available on ForkLog), the rate is determined based on the average electricity price for the reporting period:

• At a cost of 5-10 tenge per 1 kWh, the tax rate will be 10 tenge;
• 10-15 tenge per 1 kWh – rate 7 tenge;
• rate of 15-20 tenge – 5 tenge per 1 kWh;
• 20-25 tenge per 1 kWh – rate 3 tenge;
• 25 tenge and above for 1 kWh – the rate is 1 tenge.

Regardless of the cost of electricity when using renewable resources, the tax rate for miners will be 1 tenge per 1 kWh.

Sergey Putra, Vice President of the Kazakhstan Blockchain and Data Center Industry Association, noted in a meeting with ForkLog that lawmakers only approved the bill on the first reading, and the document is still subject to change.

Putra also said that electricity supply to miners has not yet been restarted and restrictions have been in place since the beginning of the year.

Recall that from January 1, 2022, Kazakhstan imposes an additional tax fee of 1 tenge per 1 kWh of electricity consumed during mining.

In February, President Kassym-Jomart Tokayev ordered an increase in the tax on the production of cryptocurrencies. The country’s Ministry of Economy has proposed to increase the rate by 10 times and also announced that it plans to tie the tax fee for miners to the cost of cryptocurrencies.

Against the background of tax increases and restrictions on electricity supply, many representatives of the mining industry began to leave Kazakhstan. Read more in the exclusive ForkLog: