Just a few years ago, the phrase “creative economy” sounded almost futuristic in Kazakhstan. Today, it describes a tangible sector made up of tens of thousands of businesses and hundreds of thousands of people. And policymakers, it seems, are beginning to take notice.
I recently came across an article in Kursiv reporting that Kazakhstan’s Ministry of Culture and Information, led by Aida Balayeva, had expanded the list of activities classified as creative industries. The number of eligible economic activity codes has risen from 43 to 53, with the updated list covering new areas in advertising, digital products, publishing and other creative businesses.
To an outsider, this may look like a technical adjustment – little more than a few extra lines added to an official list. But for those of us working in the industry, it means much more. This is not simply about formal recognition. Businesses that meet the relevant criteria can qualify for a special tax regime, with a single tax rate of 2% to 4% for individual entrepreneurs and 8% for legal entities. The regime also provides exemptions from individual or corporate income tax and VAT.
In practical terms, imagine a design studio earning KZT 20 million a year. At a 4% rate, its tax bill under this regime would be KZT 800,000.
The remaining money stays in the business. It can go towards salaries, team development, equipment, software, marketing and new projects. For a small studio, the difference between this model and a heavier tax burden can be decisive. Sometimes it amounts to one or two months of payroll.
At first glance, the reaction might be: “Fine, the government has given creative businesses a tax break. Case closed.” But the issue runs much deeper.
Consider a typical branding agency.
It has no factory, machinery, warehouse full of raw materials or production line. It does not buy tonnes of metal and turn them into a finished product. Its main productive assets are people – their knowledge, experience, ideas and time. A strategist develops the brand platform. An analyst conducts the research. Designers build the visual system. An art director brings it all together, while a project manager keeps the process moving.
The client is not paying for raw materials by the kilogram or for hours of machine operation. The client is buying the intellectual output of a team of specialists. That is a fundamentally different kind of economy.
For a design studio, advertising firm or branding agency, payroll and professional expertise account for a large share of costs. There is still rent, hardware, software, subcontracting, production, photography, filming, printing and much else besides. But in many projects, these expenses are relatively small compared with the cost of human labour. This is where the traditional tax model begins to run into problems.
Why VAT is particularly painful for knowledge businesses
A manufacturing company typically generates substantial input VAT through purchases of raw materials, equipment, components and supplier services. A company producing intellectual property has a very different cost structure. Suppose our typical branding agency develops a corporate identity for KZT 10 million. Most of the project’s value comes from the work of its team. Yet if the agency is VAT-registered, the client receives an invoice that includes VAT.
The agency, meanwhile, may have little comparable input VAT to offset against that liability. This creates a peculiar mismatch. Most of the economic value is produced by human expertise, while a tax system designed largely around the movement of goods and taxable purchases does not always fit that business model particularly well.
That is why a special regime for the creative economy makes sense. From the government’s perspective, I do not see this as an attempt to “let creative people off paying taxes”. It is an effort to bring the tax system closer to the economic reality of the industry.
High revenue does not mean a creative business is secure
There is another feature of Kazakhstan’s market that rarely appears in official documents: maintaining a steady flow of work in the creative sector is extremely difficult. A branding agency might win a large project that keeps it busy for several months, then spend the next two months looking for another. An advertising agency may deliver a major campaign, only to see the client cut its budget afterwards. A design studio can receive several commissions at once, followed by a period when new work almost disappears.
The costs do not disappear with it. Salaries still have to be paid. The team needs to be kept together. Software and services must be maintained. The office or studio still costs money. The company must continue marketing itself and developing its expertise. This is where a creative company differs sharply from a business that can simply halt production for a few weeks and cut its purchases of raw materials.
An agency’s most valuable asset is its team. If that team falls apart during a quiet period, the agency effectively loses its productive capacity. For creative businesses, then, a lower tax burden is not simply a way to increase the owner’s profit. It is a buffer against an unstable market – a chance to retain specialists, protect jobs and keep investing in growth.
This is bigger than the fate of individual agencies
The numbers matter here. Yes, this is where things get slightly dry, but the statistics are essential. According to the Ministry of Culture and Information, Kazakhstan has more than 45,000 creative-industry businesses employing over 140,000 people. The government wants to increase employment, expand the number of businesses in the sector, boost exports of creative goods and services, and raise the creative industries’ share of GDP to 2% by 2029.
That is a telling target. The state is, in effect, acknowledging that the creative economy is a distinct economic sector. And it is difficult to argue otherwise. In today’s world, a company’s value is increasingly determined not only by how many machines or square metres of property it owns, but also by its ability to create technology, products, brands, content and new ideas.
The giants of the global economy have been moving in this direction for years. Apple does not merely sell devices. Nike does not merely sell shoes. Google does not merely sell technology. Much of the value in the modern economy is created by assets that cannot be held in your hands. The US and Europe understood this long ago. Why should Kazakhstan be an exception?
Branding is a good example of the new economy
Take an ordinary Kazakh company. It may produce bottled water, food, machinery or clothing, or perhaps provide services. But to compete, it needs a name, a brand, packaging, communications, a website, advertising materials and a marketing strategy.All of that is created by creative professionals.
The chain is straightforward:
A traditional business makes a product. A creative business builds its market value. Marketing helps sell that value. The economy gains revenue, jobs and tax receipts. Supporting creative industries therefore strengthens traditional industries as well.
A powerful brand can help a Kazakh manufacturer compete not only at home but abroad. Investing in design, advertising, branding, architecture, cinema, digital products and other creative fields also means investing in the country’s export potential, its ability to attract foreign capital and the growth of economic sectors that Kazakhstan has barely begun to explore.
Tax policy alone will not build a creative economy
It is particularly encouraging that the government is beginning to develop infrastructure alongside tax incentives. The special tax regime is only one part of a broader transformation. Even from the sidelines, we can see the state developing regional creative hubs, financial and non-financial support mechanisms, and opportunities for creative businesses to participate in funding programmes and other initiatives.
That is the right approach. A creative economy cannot be built through tax cuts alone. Kazakhstan needs skilled professionals. Young people entering the industry need proper education. Creative teams need places to work. Creative businesses need clients and investment. The economy needs exports. Above all, society needs to understand that design, advertising, music, film, architecture, IT and other creative professions are not peripheral activities. They are part of the economy itself.
The President’s position matters
In my view, President Kassym-Jomart Tokayev has taken a genuinely forward-looking position on this issue. Since 2021, his annual addresses have repeatedly highlighted the need to develop the creative sector. That message is gradually becoming concrete government policy. Definitions are being introduced. Lists of eligible activities are being expanded. Tax instruments, infrastructure and industry targets are taking shape. This is one of those cases where government support is not trying to invent an industry from scratch. It is responding to changes that are already reshaping the economy.
The creative economy already exists, and it will continue to grow. The more production becomes automated, and the faster artificial intelligence and digital technologies advance, the more valuable the things that cannot be fully automated become: ideas, culture, human insight, and the ability to create meaning, concepts and new products.
AI can already generate images, copy and presentations. But businesses still need people who understand what should be created, why the market needs it and what kind of value it is meant to produce. That is why human capital in the creative industries will become dramatically more valuable.
Kazakhstan should build an export industry, not simply support creators
This brings us to the next level of the challenge.
A talented designer in Kazakhstan can work for a client in Dubai. A branding agency in Astana can develop a visual identity for a European company – as we are doing right now. A software developer in Almaty can build a digital product for the US market. An architect can join an international team working on major construction projects. Musicians, filmmakers, photographers, illustrators and game developers can sell their work around the world without shipping a single physical product across the border. That is one of the defining advantages of the creative economy.
A country does not have to export only oil, metals or grain. It can export its own intellectual value. For Kazakhstan, which has spent years trying to diversify its economy, that opportunity is especially important.
The special tax regime is only the beginning
One caveat is important. At this stage, we are primarily seeing the foundations of a new framework for creative businesses. This does not necessarily mean that every creative-industry company can already claim all the tax benefits described above. But the direction is clear. The government is expanding the list of recognised creative activities, developing dedicated support mechanisms and preparing tax rules better suited to the sector. The crucial task now is to turn those plans into a system that works in practice.
For a branding agency, advertising firm, design studio or other knowledge-based business, a lower tax burden could have an immediate and practical impact. It could mean retaining a team, investing in development, taking on more projects, raising salaries and entering new markets. More important, however, is what the regime itself represents. It suggests that the government is beginning to understand the distinctive economics of creative businesses and to recognise them as a fully fledged part of the economy. That may be the most valuable shift of all. The future of the economy lies in technology, brands, design, content, architecture, cinema, gaming, music, advertising and thousands of other products created by human intelligence. It is not limited to factories, roads and natural-resource deposits.
The creative economy is an economy of ideas. A country that wants to move forward must make room for the people who create them. If Kazakhstan can provide them with better conditions today, it will be investing not only in the economy of the future, but in the economy that is already taking shape.
