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Abstract
This study examines the tax potential of the regions of the Republic of Kazakhstan as a basis for determining regional needs for general-purpose transfers. The relevance of the study is significant interregional disparities in economic activity and fiscal capacity, as well as the need to strengthen the evidence base for intergovernmental fiscal equalization. The aim of the study is to identify the key socioeconomic factors associated with the formation of regional tax revenues and to assess their potential use in developing a more comprehensive assessment of regional tax potential. The study draws on official statistical and budgetary data from the Republic of Kazakhstan for 2021–2025. For the quantitative assessment of the relevant factors, panel data covering 20 regions for 2022–2025 are used, with region-specific fixed-effects models estimated separately for each factor. The factors examined include gross regional product, fixed capital investment, industrial production, the number of active small and medium-sized enterprises (SMEs), SME gross value added, average monthly wages, and employment. The results demonstrate sustained growth in local budget tax revenues alongside substantial interregional disparities. Six of the seven factors examined exhibit statistically significant positive associations with tax revenues. The highest coefficient is observed for the number of active SMEs (3.161; p<0.001), followed by GRP (1.645), industrial production (1.363), and SME gross value added (1.209). The association between employment and tax revenues is not statistically significant. The findings support a shift from assessing regional tax revenue capacity exclusively on the basis of actual tax revenues toward a more comprehensive assessment of potential regional revenue capacity. Such an approach can strengthen the evidence base for determining regional needs for general-purpose transfers and contribute to improving intergovernmental fiscal equalization in Kazakhstan.