Page 16 - bne Newspaper 170317

Eurasia
March 17, 2017 www.intellinews.com I Page 16
Government remains
in the dark about Kazakh shadow economy
Nizom Khodjayev in Almaty
Kazakhs had registered shady money and undoc- umented property amounting to some KZT5.7tn (€16.9bn) by the end of last year under the gov- ernment’s capital amnesty programme, but this merely scratches the surface of the country’s true shadow economy.
The Kazakh government first approved a capital amnesty law in 2014, enabling Kazakh citizens, ethnic Kazakhs moving home from abroad and those holding residence permits to register prop- erty and money taken out of legal circulation as cash or cash-equivalents. The law was introduced in an effort to bring greater transparency to the country’s capital flows by clamping down on mon- ey laundering. More specifically, Astana hoped to achieve two goals: reduce the size of the shadow economy and legalise $50bn worth of money and property.
However, this effort flopped, with the Central Asian country persuading residents to regis-
ter just KZT84bn ($25.4mn) by November 2015. Even after the government amended the law at that time to significantly simplify the legalisation process, assets totalling a little over a third of the $50bn were registered by the deadline of the end of December 2016.
The authorities had estimated they would gain an- nual tax revenues worth KZT200bn from the newly registered property and capital. Legalised com- mercial real estate alone would result in an annu- al KZT800mn in property tax income. The return of
Kazakhs registered murky money and undocumented property amounting to some KZT5.7tn (€16.9bn) by the end of last year.
KZT4.1tn of cash and cash equivalents back into legal circulation is expected to annually generate KZT150bn in taxes.
Yet official figures indicate the programme regis- tered the equivalent of 10% of Kazakhstan’s GDP, whereas the post-Soviet nation’s shadow economy is estimated at 30-40% of GDP, based on esti- mates by independent analysts.
Legal money laundering
Some analysts have hinted that the programme was in fact designed with an entirely different purpose – to clean dirty capital and property be- longing to Kazakh elites. “In my opinion, the elites are trying to guarantee the safety of their wealth,” human rights defender Yevgeny Zhovtis said when the amnesty law was originally passed. Senior officials and investors acquired assets during privatisations in the 1990s in very untransparent processes that were entangled in corruption.
Under the official rules of the capital amnesty programme, property acquired via crime and cor- ruption could not be amnestied, but there were few safeguards put in place to stop this. Bribery and corruption are rampant in Kazakhstan, and the government is ineffective in curbing it.
In 2015, Kazakh economist Magbat Spanov pro- jected in an interview with Expert.ru that only the 3-5% of the population who own 90% of the property in the country would take part in the programme. The prediction was based on the