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Kazakhstan CBDC pilot cuts VAT refund wait to 10 days

Kazakhstan CBDC pilot cuts VAT refund wait to 10 days

GrafaGrafa2024/10/31 10:00
By:Isaac Francis

Kazakhstan has successfully piloted a project using its central bank digital currency (CBDC), the digital tenge, to significantly reduce the waiting time for value-added tax (VAT) refunds.

The National Bank of Kazakhstan (NBK), working with the Ministry of Finance, demonstrated that the new system lowered the refund period from 70-75 days to just 10-15 days.

According to NBK’s chief digital officer, Binur Zhalenov, the goal is to eventually achieve instant refunds.

The efficiency improvement was achieved through automation, eliminating manual checks by the State Revenue Committee.

Zhalenov stated, “These initiatives show the versatile applications of programmable money in improving government processes and financial operations.”

The pilot project aligns with Kazakhstan’s ongoing efforts to explore CBDC applications.

The digital tenge was first piloted in early 2023, focusing on its programmability to enhance efficiency and combat corruption.

Currently, around 40 billion tenge ($81.8 million) circulates in digital form.

In November 2023, Kazakhstan expanded its CBDC pilot to explore both retail and wholesale uses.

Local banks began issuing Visa and Mastercard debit cards linked to digital tenge accounts, and wholesale applications included issuing a digital tenge-backed stablecoin, tokenising gold, and enabling cross-border payments via SWIFT.

One notable application of the digital tenge involved paying for the construction of a rail line from central Kazakhstan to the Chinese border.

In this case, payments were programmed to be released only to contractors that met their obligations, showcasing the currency’s potential to enhance accountability in major projects.

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Disclaimer: The content of this article solely reflects the author's opinion and does not represent the platform in any capacity. This article is not intended to serve as a reference for making investment decisions.

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