Authorities in Kazakhstan have found several businesses minting digital currencies that took advantage of tax cuts they were allegedly not supposed to benefit from. Auditors said the crypto firms registered as “innovative companies,” to receive millions of dollars in tax preferences.
5 mining entities in Kazakhstan obtain $18 million in tax exemptions
Kazakhstan’s auditors have identified crypto-mining companies that have been able to benefit from the tax advantages normally offered to companies engaged in the development of innovations. According to a representative of the country’s Accounts Committee which oversees budget spending, this indicates that the “Digital Kazakhstan” program is not being properly implemented.
Quoted by the Inbusiness.kz portal, Akylbay Ibraev explained that the companies had become residents of the Astana Hub and received support for their investment projects in the field of cryptocurrency mining when this is not the main purpose of the tech park.
Ibraev revealed that five mining farms got tax benefits for 8.5 billion tenge ($18 million) in the third quarter of 2021. The official insisted that they should not qualify for the tax exemptions. “The task of the hub is to attract and implement IT investment projects,” he stressed.
It turns out, however, that the miners have not done anything against the current law. The Accounts Committee now proposes amendments to avoid such situations in the future. “Based on the results of our audit, a recommendation was made to the government to improve the legislation in this area,” Ibraev added.
Also, according to Kazakh Deputy Minister of Digital Development, Innovation and Aerospace Industry, Askar Zhambakin, crypto companies cannot be held liable for damages or losses to the state budget. .
“These mining farms, as well as other entities and IT companies, have the right to register [at the tech park]. We are currently amending the registration rules to address this issue,” the government official said. He was clear that any resident of the Astana Hub can rely on tax breaks, affordable office space, and other support.
Kazakhstan, which became a mining hotspot last year after China launched an offensive against the industry, has also clamped down on the sector in recent weeks. Miners have been blamed for the country’s growing energy deficit, and in February President Kassym-Jomart Tokayev ordered the country’s financial watchdog to identify all mining entities and verify their tax and customs documents.
Mining enterprises have been hurt by power cuts during the winter months and the electricity shortages have already forced some companies to relocate to other countries like the United States. In mid-March, authorities closed down over 100 coin minting facilities across Kazakhstan, including legally operating bitcoin farms.
