Kazakhstans Digital Tenge Pilot Project Enhancing Tax Refund Efficiency with 84 Million USD in CBDC Circulation
The National Bank of Kazakhstan (NBK) previously launched its central bank digital currency (CBDC), named digital tenge. At the recent PLUS Forum Almaty conference, the digital tenge became a focal point as NBK showcased the “programmable” multifaceted applications of CBDC through its latest pilot program. It announced a significant reduction in the waiting time for value-added tax (VAT) refunds and plans to promote digital tenge across more financial sectors to enhance efficiency and transparency.
Digital tenge improves refund efficiency, shortening VAT refund wait times to 10-15 days
Recently, NBK collaborated with the Ministry of Finance’s Tax Committee to launch a pilot program aimed at automating VAT refunds using digital tenge, thereby reducing the traditional manual review process. By automatically tagging VAT transactions between companies, digital tenge has dramatically shortened the waiting time for exporters’ refunds from the original 70-75 days to just 10-15 days. NBK even plans to achieve real-time refunds in the future, allowing exporters to manage their cash flow more flexibly.
Digital tenge expands public procurement and national subsidies, with 40 billion digital tenge in circulation
In addition to VAT refunds, the pilot program for Kazakhstan’s central bank digital tenge will extend to public procurement processes, national fund financing, and investment subsidy management. Binur Zhalenov, head of the digital department at the central bank of Kazakhstan, indicated that these new applications enhance the transparency and efficiency of fund allocation. To date, 40 billion digital tenge (approximately 84 million USD) is circulating within Kazakhstan’s economy.
The development of programmable CBDC, from anti-corruption functions to cross-border transactions
The programmability of digital tenge was one of the features highlighted in the first pilot program launched last February, initially designed to combat corruption and illegal activities, ensuring transparency in fund flows. By the end of 2023, the Kazakhstan government restructured the bill exchange into a “National Payment Company,” responsible for the infrastructure of CBDC, and in November, it launched a series of retail and wholesale pilot programs, including the issuance of digital cards linked to CBDC accounts via Visa and Mastercard, and cross-border transactions through Swift. The applications of digital tenge also extend to stablecoin issuance, gold tokenization, and cross-border transactions. For example, in one programmable digital tenge project, digital tenge was utilized to pay for construction costs of railways from central Kazakhstan to the Chinese border, with payment conditions set to allow the use of digital tenge only when specific conditions were met, ensuring that funds flow to compliant partners and increasing the transparency and security of fund management.
(Kazakhstan’s digital tenge pilot program launched, with the first batch of CBDC issued)
