Taxation in Kyrgyzstan
General tax regime
It should be noted that taxation in Kyrgyzstan, if we do not take into account certain practical nuances of tax administration, is quite attractive and comfortable for business both in terms of the number of taxes and in terms of tax rates.
The main tax regime is the so-called general tax regime, which provides for the following main types of taxes:
| Name of the tax | Basic tax rate | Tax base | Features |
| Income tax | 10% | Profit calculated as the positive difference between the total annual income and the allowed tax deductions | A carry-forward of tax losses for 5 years is provided; the rule of thin capitalization of interest is not applied; there are double taxation treaties with more than 30 countries around the world; There are some benefits/special rates for certain categories of entities and activities |
| Value Added Tax (VAT) | 12% | Taxable value of taxable supply and taxable value of imported goods | A mechanism for VAT refund is provided; more than 30 types of supplies are exempt from VAT; Exports of goods are taxed at a "zero" rate |
| Sales tax | 1-5% | Revenue from the sale of goods, works, services from entrepreneurial activities excluding VAT and sales tax |
Certain categories of entities and transactions are tax-exempt |
Depending on the type of activity carried out and the ownership of certain types of property, the following types of taxes may be additionally applicable: excise tax (applicable to entities engaged in the production and/or import of excisable goods), taxes on the use of subsoil (bonus and royalties – applicable to subsoil users), property tax (applicable to owners of real estate and vehicles).
Special tax regimes
In addition to the general tax regime, the tax system of the Kyrgyz Republic also provides for a number of special tax regimes. As a rule, special tax regimes imply the application of a special tax/payment instead of some basic types of taxes of the general tax regime or exemption from or application of reduced rates of certain taxes provided for by the general tax regime. The possibility or necessity of applying a particular special tax regime is usually due to the status of the entity, the types of activities that it carries out, and/or its location.
At present, the tax legislation of the Kyrgyz Republic provides for the following 8 special tax regimes:
- patent-based tax;
- simplified taxation system based on a single tax;
- tax regime in free economic zones;
- tax regime in the Hi-Tech Park;
- mining tax;
- tax on activities in the field of electronic commerce;
- gambling tax;
- tax on activities in a trade zone with a special regime.
Let's dwell on such an interesting special tax regime as the tax regime in the Hi-Tech Park in Kyrgyzstan.
Tax regime in the Hi-Tech Park
This special tax regime can only be applied by residents of the High-Tech Park (HTP) of Kyrgyzstan. At the same time, a legal entity or an individual (including a foreign one) whose income consists of at least 90% of income received as a result of one or more of the following types of activities can be registered as a HTP resident:
- software development, including: analysis, design and programming of information systems, including ready-to-implement systems, analysis of information needs and problems of users, design, development, delivery and documentation of individual and/or ready-made software, including those that meet the orders of specific consumers, adjustment of programs at the direction of the user;
- export of information technologies and software;
- creation and provision of services of interactive service centers.
Upon expiry of 1 year from the date of final registration as a HTP resident, at least 80% of the goods and services of the HTP resident must be exported and/or at least 80% of the HTP resident's income must be earned as a result of the export of goods and services.
HTP residents in Kyrgyzstan are exempt from income tax, sales tax and VAT on taxable supplies. In addition, a reduced income tax rate of 5% is applied when taxing income paid by HTP residents to employees. However, "in lieu of" these tax benefits, HTP residents pay quarterly deductions to the HTP Directorate to finance the HTP activities in the amount of 1% of the revenue received for the previous quarter. HTP residents also submit a single tax return in accordance with the established procedure, as well as pay other applicable taxes (e.g., withholding taxes, import VAT, property tax, etc.).
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