Kazakhstan has discovered several digital currency minting businesses that took tax breaks they were not meant to. Auditors said the crypto firms registered as “innovative companies,” to receive millions of dollars in tax preferences.
Kazakhstan: 5 mining entities get $18,000,000 in tax exemptions
Kazakhstani auditors identified cryptocurrency mining firms that could receive tax benefits usually offered to companies involved in innovation development. According to a representative of the country’s Accounts Committee which oversees budget spending, this is an indication that the “Digital Kazakhstan” program is not being implemented properly.
AkylbayIbraev, quoted by Inbusiness.kz said that these companies have become citizens of the Astana Hub. He explained that they received assistance for investment projects in cryptocurrency mining even though this isn’t the primary purpose of the tech park.
Ibraev disclosed that tax preferences were given to five mining farms for an amount of 8.5 billion Tenge (or $18 million) during the third quarter 2021. Official insisted that they shouldn’t be eligible for tax exemptions. “The task of the hub is to attract and implement investment projects in IT technologies,” he pointed out.
The miners didn’t do anything that was contrary to the existing law, as it turned out. To prevent future situations like this, the Accounts Committee is proposing amendments. “Based on the results of our audit, a recommendation was made to the government to improve the legislation in this area,” Ibraev added.
What’s more, according to Kazakhstan’s Deputy Minister of Digital Development, Innovation, and Aerospace Industry Askar Zhambakin, the crypto businesses cannot be blamed for any 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 said that Astana hub residents can benefit from tax-free office space and support.
After China’s offensive last year against Kazakhstan’s mining sector, Kazakhstan became a major mining hub. However, the country has been repressive of the sector in recent weeks. Miners have been blamed for the country’s growing power deficit and in February President Kassym-Jomart Tokayev ordered the nation’s financial watchdog to identify all mining entities and check their tax and customs documents.
The winter power outages have had a negative impact on mining enterprises. Many companies have relocated to countries such as the United States due to electricity scarcity. Authorities shut down more than 100 mints in Kazakhstan between March 2 and 3. This includes legal bitcoin farms.
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