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About the introduction of the Single Total Payment

The draft Law of the Republic of Kazakhstan "On Amendments and Additions to Certain Legislative Acts of the Republic of Kazakhstan on the Formalization of Population Employment" (hereinafter referred to as the Draft Law) has been developed in accordance with the instructions of the Head of State to work out issues on the participation of the self-employed population in social security systems, voiced in the Address to the People of Kazakhstan of January 10, 2018 "New Opportunities for Development in the Context of the Fourth Industrial Revolution", and also by the decision issues of participation of self-employed people in the program of compulsory social health insurance.

According to this, the Draft Law proposes:

The first, systematic measures to legalize the activities of the informal workers, through the introduction of a single aggregate payment.

The second, a single definition of "busy person", and "independent worker", as well as categories related to the employed population.

Third, to unify the categories of payers in the laws on social insurance, compulsory social health insurance, and pensions.

As shown by the current situation of informal employment, factors such as the complicated procedure of registration and de-registration with the tax authorities, the presence of numerous payment systems and the difficulty in determining the tax regime help.

To legalize the activities of the informal workers, it is proposed to introduce the Single Total Payment (hereinafter referred to as the "STP"), which provides for a simplified procedure for registration with the tax authorities.

For payers of the STP, lower rates for tax and social payments will be determined, rather than in the general regime.

Payment of the STP will allow not only to register informal activities but also to participate in the system of compulsory medical and social insurance, pensions.

At the same time, the size of the STP will be fixed, that is, it is not necessary to calculate the amount of contributions to various social funds independently.

The STP will apply to individuals engaged in activities for the purpose of generating income, subject to the following conditions:

1) do not use the labor of hired workers;

2) perform work, provide services for individuals. persons;

3) sell agricultural products from the exploitation of a personal subsidiary farm for consumption to individuals.

At the same time, the marginal income for a calendar year should not exceed 100 MW.

The STP will not apply to:

1) individuals providing services on the territory of commercial real estate objects, including retail facilities;

2) persons who lease the property, except for the home;

3) persons engaged in private practice;

4) foreigners and stateless persons, with the exception of oralmans;

5) persons who have state registration as an individual entrepreneur;

In general, the introduction of the STP for the informal:

  • to get access to medical services, unlimited in amount and types, with the right to choose a medical institution;
  • participate in the funded pension system and receive a basic pension benefit, depending on the length of participation in the system;
  • receive social benefits in cases of disability, loss of a breadwinner, pregnancy, and childbirth, adoption or adoption of a child, care for a child under 1 year.

Defined:

1) the size of the Single Total Payment in cities 1 MCI, in villages 0.5 MCI;

2) terms of introduction of the Single Total Payment for 5 years;

3. The shares of the Single Total Payment will be:

- 10% - for individual income tax;

- 20% - social deductions to the State Social Insurance Fund;

- 30% - pension payments to the Unified Accumulative Pension Fund;

- 40% - deductions to the Fund of compulsory social and medical insurance.

The single aggregate payment is expected to be made before 1 January 2024.

In the current Law "On employment of the population" there is no definition of "employed persons", and the definition "self-employed persons" only list the categories of self-employed, according to the statistical classification of the International Labor Organization.

In addition, the legislation has a different interpretation of the concept of "self-employed person".

For the uniform application of the above terms, the Law on Employment of Population suggests the following definitions:

Employed person - an individual who carries out activities for payment (or) extraction of income, through the use of property, the production of goods, the sale of goods, the provision of services;

Independent worker - an individual who independently carries out activities for the production (sale) of goods, works and services with the purpose of extracting income, except for individual entrepreneurs, persons engaged in private practice, founders (participants, shareholders) of a business partnership and a joint-stock company, members of a production cooperative;

Employed employee - an individual who performs work under an employment contract or an individual who carries out activities under a contract of a civil nature in which the order and payment for the worked time or unit of the goods produced or for the services provided are determined by the customer.

The bill revised the categories of the employed population, containing the main features, which include the form of activity of individuals, the sources of their income and the place of work.

Thus, in comparison with the current regulation of the employed population, a broader categorization of employed persons is proposed, including the categories of employed persons.

The absence of the legislation of a clear classification of the employed population led to differences in the categories of payers.

Along with the introduction of payers of the CAP, payers of social payments and contributions in the laws "On compulsory social health insurance", On compulsory social insurance "and" On pension provision "are unified.

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