Liability of a Founder for the Tax Debts of a Company in Kyrgyzstan
Many entrepreneurs believe that once a company is liquidated, their obligations to the state end. However, Kyrgyz legislation outlines specific cases in which founders may be liable for the company's fiscal debts, even after liquidation.
Who is Responsible?
According to the Civil Code of the Kyrgyz Republic, founders (participants) or property owners of a legal entity are generally not liable for the obligations of the legal entity, and vice versa. However, this rule allows for exceptions established by law or the company’s founding documents.
One such exception is found in Article 74 of the Tax Code.
What Does Article 74 of the Tax Code Say?
If a company being liquidated does not have sufficient funds to settle its tax obligations fully, its founders may be required to cover the unpaid tax debt, by the procedure and limits defined by civil law.
This means tax authorities may seek to recover the debt through civil court proceedings against the company’s founders.
Criminal Liability for Unpaid Taxes
In practice, tax authorities increasingly refer cases to law enforcement agencies when the amount of unpaid taxes exceeds 100,000 KGS (approximately USD 1,142).
In such cases, criminal proceedings may be initiated against the company’s director under Articles 241–243 of the Criminal Code.
However, the law provides a way out: if the individual voluntarily repays the full amount of tax or customs debt, including penalties and fines, criminal prosecution must be terminated, regardless of the stage of the legal process.
Author: Saodat Shakirova, Partner, ARTE Law firm
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