Authorities in Kazakhstan have discovered that a number of businesses that were engaged in crypto mining activities were taking advantage of tax benefits that were allegedly not applicable to them. The auditors stated that these crypto companies had registered as ‘innovative companies’ in order to get tax exemptions worth millions of dollars. The auditors were able to identify a number of crypto mining enterprises that were enjoying the tax benefits meant for businesses that are involved in innovations development. A representative of the Accounts Committee of the country, which is responsible for the budget spending, said that this shows that the ‘Digital Kazakhstan’ program has not been implemented properly.
AkylbayIbraevelaborated that the mining enterprises had become residents of the Astana Hub and were getting support for their investment projects related to crypto mining, even though this is not the primary aim of the tech park. According to Ibraev, tax preferences had been granted to five mining farms in the third quarter of 2021, which was valued at 8.5 million tenge($8 million). As per the official, these companies should not be eligible for these tax exemptions. He highlighted that the purpose of the hub is to attract and then launch investment projects related to IT technologies.
However, as it turns out, the mining companies are not doing anything that is against the existing law. Now, amendments have been proposed by the Accounts Committee that can help in avoiding such situations in the future. Ibraev said that they had used the results of their audit for making recommendations to the government for improving the legislation in the area. Furthermore, AskarZhambakin, the Deputy Minister of Digital Development, Innovation and Aerospace Industry in Kazakhstan, said that they could not hold crypto businesses accountable for any losses or damages to the state budget.
He said that these mining companies, along with other enterprises and IT companies, were well within their rights for registering at the tech park. The government official said that the registration rules were being amended for addressing the issue. He clarified that any that any resident of the Astana Hub could rely on the affordable office space, the tax breaks as well as other support. Kazakhstan had become a mining hub last year after an offensive was launched against the mining industry by China. However, the country has also cracked down against the sector in the last few weeks.
The power deficit in Kazakhstan appears to be growing and mining companies have been blamed for this shortage. The financial watchdog of the nation was ordered by Kassym-JomartTokayev, the country’s President, to identify the mining entities operating in Kazakhstan and check their customs and tax documents. The power cuts have affected mining enterprises in the winter months and some companies have already moved to other countries, such as the United States, because of electricity shortages. More than 100 crypto mining companies had been shut down in Kazakhstan back in March and some of these bitcoin mining farms had been operating legally.