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Taxes and charges

 

TAXES AND CHARGES

Taxation in the Kyrgyz Republic is regulated by the Tax Code of the Kyrgyz Republic and other regulatory legal acts. The competent authority exercising control over compliance with tax laws and full and timely payment of taxes is the State Tax Service under the Government of the Kyrgyz Republic.

Among mandatory charges are  social security contributions  to the Social Fund of the Kyrgyz Republic regulated by the Law “On State Social Security ”, the Law “On Tariffs of Social Security Contributions for State Social Security ”, and other acts.

For more information on social security contributions, fees and other mandatory charges please refer to points 6.9, 6.10 of this section.

Types of Taxes

The current Tax Code was enacted in October 2008 and took effect on the 1st of January, 2009. 

According to it, nowadays, the following taxes are paid  in the Kyrgyz Republic under the general tax regime. 

National taxes such as:

  • Profit tax
  • Income tax
  • Value added tax
  • Excise tax
  • Mining taxes  (Bonuses and Royalties)
  • Sales tax

Local taxes such as:

  • Land tax
  • Property tax

For taxation purposes, legal entities are divided into domestic and foreign entities. Domestic entities are legal entities organized under the laws of the Kyrgyz Republic, and foreign entities are corporations, companies, firms, foundations, institutions or other formations organized under the laws of a foreign state, or international organizations. Foreign entities, in their turn, are divided into foreign entities operating through a permanent establishment in the Kyrgyz Republic, and foreign entities not operating through a permanent establishment in the Kyrgyz Republic. 

 

Foreign entities operating through a permanent establishment in the Kyrgyz Republic

A foreign entity operating through a permanent establishment in the Kyrgyz Republic becomes a taxpayer along with domestic entities.

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Foreign entities not operating through a permanent establishment in the Kyrgyz Republic

If a foreign entity is not operating through a permanent establishment in the Kyrgyz Republic, but it derives income from the sources located within the Kyrgyz Republic, for taxation purposes, it is treated as a foreign entity not operating through a permanent establishment in the Kyrgyz Republic. In this case, an individual entrepreneur or legal entity paying income to such foreign entity must assess, withhold, and transfer to the budget the amount of tax on income received from a source in the Kyrgyz Republic by a foreign entity not operating through a permanent establishment in the Kyrgyz Republic, without deductions at the following rates:

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Profit Tax

Payers of profit tax include domestic entities, foreign entities operating through a permanent establishment in the Kyrgyz Republic, sole proprietors,  entrepreneurs and legal entities paying income from a source in the Kyrgyz Republic to foreign entities not operating through a permanent establishment in the Kyrgyz Republic.

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Income Tax

Payers of income tax are  Kyrgyz citizens, resident non-Kyrgyz citizens   and non-resident non-Kyrgyz citizens  receiving income from a source in the Kyrgyz Republic, and individuals or legal entities paying income to individuals from a source in the Kyrgyz Republic. 

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Value Added Tax

Value added tax (VAT) is a tax collected and remitted to the government  on the value of  VAT-taxable supplies in the territory of the Kyrgyz Republic, including taxable import supplies to the Kyrgyz Republic.

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Excise Tax

Payers of excise tax are entities manufacturing excisable merchandise, including on a give-and-take basis, within the Kyrgyz Republic, and/or importing excisable merchandise to the Kyrgyz Republic such as:

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Sales Tax

Payers of sales tax are domestic entities, foreign entities operating through a permanent establishment in the Kyrgyz Republic and sole proprietors.

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Mining  taxes

Mining  taxes are:

  • Bonuses;
  • Royalties.

Read more

 

Land tax

Payers of land tax are entities treated as land owners or users whose land use rights are certified by standard title documents and actual owners and/or users of land plots.

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Property tax

Payers of property tax are entities and individuals that own taxable property such as:

  • Residential property (residential houses, apartments, summer houses) meant for permanent or temporary residence and not used for business purposes (group 1);
  • Residential property (residential houses, apartments, summer houses), boarding houses, holiday hotels, health resorts, resorts, production, administrative, industrial and other buildings and structures meant or used for business purposes (group 2);

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Deductions to the Social Fund of the Kyrgyz Republic 

Payers of state social security contributions  are:

  • Legal entities, regardless of their legal structure or type of ownership, and their standalone  subdivisions (branches and representative offices);
  • Peasant (husbandry) farms ;
  • Individuals.

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Mandatory fees and other charges

Additionally, Kyrgyz law imposes certain mandatory fees and other charges on business entities depending on their status and type of activity, such as customs duties (refer to section 15), license fees, waste disposal fees, local infrastructure development and maintenance fees, etc.

 

Special Tax Regimes

In addition to  general tax regime , Kyrgyz law establishes  special tax regimes  for specified categories of taxpayers. These regimes are : 

  • Simplified single tax-based tax regime;
  • Mandatory patentbased tax regime;
  • Voluntary patent-based tax regime;

Read more

 

Double Taxation Treaties 

To avoid double taxation and prevent income tax and capital tax dodging, the Kyrgyz Republic has signed a number of bilateral treaties with a number of countries such as[1]:

  • The Republic of Kazakhstan;
  • The Republic of Belarus;
  • The Republic of Ukraine;
  • The Republic of Tajikistan;
  • The Republic of Uzbekistan;
  • The Russian Federation;
  • The People’s Republic of Mongolia;
  • The Republic of India;
  • Canada;
  • The Republic of Poland;
  • Malaysia;
  • The Republic of Turkey;
  • The Swiss Confederation;
  • The Islamic Republic of Iran;
  • The People’s Republic of China;
  • The Republic of Austria;
  • The Republic of Finland;
  • The Republic of Moldova;
  • The Federal Republic of Germany;
  • The Republic of Lithuania;
  • The Republic of Latvia;
  • The Republic of Korea.

The Government of the Kyrgyz Republic has signed the agreement with the Republic of Lithuania (not ratified) and approved drafts of similar treaties with the Republic of Georgia, the Republic of Armenia, the Kingdom of Netherlands, and the Czech Republic. For the time being, the drafts of the treaties received from the Republic of Azerbaijan and the Republic of France are under review, the negotiations with the Grand Duchy of Luxembourg and the Republic of Korea are underway, and the negotiations with the Kingdom of Spain and the Republic of South Africa are planned.

 

 

 

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[1] Information taken from the website of the State Tax Service of the Kyrgyz Republic as of December 31, 2013: http://www.sti.gov.kg/information-for-taxpayers