On April 18, President of Kyrgyzstan Sadyr Japarov signed the Decree «On measures to support business entities and optimize tax rates and tax administration.»

The Chairman of the Tax Service, Almambet Shykmamatov, commented on the changes being introduced within the framework of the document to 24.kg news agency:

"This decree is another step towards improving the tax system so that it is convenient, simple and as comfortable as possible for businesses to pay taxes. Paying taxes is the responsibility of a true citizen, a patriot. But the process of paying taxes should not turn into a complex quest that requires a lot of brain power to solve.

In short, the main changes are as follows:

— A license system is being introduced for entrepreneurs engaged in trade. The cost of a license will be fixed depending on the retail space or estimated revenue for a year. Dordoi and Turataly Bazary currently operate under this system. They do not use cash registers there. Now this system will be everywhere. We can say that the government heard the entrepreneurs and met them halfway by canceling the mandatory use of cash registers. This is right, because our task is not to stifle business, but to set its development trajectory.

— Another incentive for small and medium businesses is the refusal to apply the tax sanction on income tax in the amount of 5 percent of the market value of the goods in the absence of documents for it.

— Next, an increase in the threshold for trading activities at a single tax rate of 0.5 percent from 30 million to 50 million soms. I will explain why this change was made. As I have repeatedly said, one of the main goals of all reforms in the field of taxation is to create a system that will maintain a reasonable balance between the interests of the state and business. That is, the system must be fair for both parties.

The analysis showed that the method of paying a single tax at a rate of 0.1 percent did not justify itself.

Thus, six Bishkek markets, applying a rate of 0.1 percent, where more than 25,000 business entities operate, paid only a little more than 5 million soms in taxes in 2024.

The fact is that the single tax provides for the mandatory use of cash registers. There were difficulties with this, traders evaded their use and paying taxes. And when the threshold of 100 million was exceeded, many simply re-registered certificates to other persons.

A fixed tax amount based on a license in these markets, depending on the volume of declared revenue and without its limitation, according to our calculations, can increase tax revenues to 1 billion soms.

We observed a similar situation in other bazaars and mini-markets, where the rate of 0, 0.5 and 1 percent was applied. Therefore, the rates of 0.1 and 1 percent were abolished, and the threshold was increased from 30 million to 50 million soms. These measures will bring businesses out of the shadows and prevent the concealment of real income that is subject to taxation.

— The following change is related to this: setting the sales tax rate for the sale of goods to anonymous entities at 2 percent (currently 4 percent).

— Important changes concern the jewelry industry. The presidential decree sets a rate of 0.25 percent for business entities engaged in the production and/or sale of jewelry.

— The document also sets a rate of 0.2 percent on income from a source in the Kyrgyz Republic, arising from the amount of funds received and transferred to it or to a third party.

All proposed changes will help increase the taxable base.

Almambet Shykmamatov

I would like to emphasize several points. All proposed changes will help increase the taxable base. Both due to improved administration and due to the fact that it will be more profitable for entrepreneurs to come out of the shadows and voluntarily pay taxes on their real revenue. Setting low and equal rates for various categories of business entities creates comfortable conditions for doing business and promotes its development.

The philosophy of reforming the tax system involves a multifaceted fight against the shadow economy, creating a favorable business and investment climate in the republic. There are no perfect tax systems, but we want it to be easy to do business in Kyrgyzstan and the rules for doing it to be simple and understandable."

Earlier, the Chairman of the Cabinet of Ministers Adylbek Kasymaliev reported that the license system would be returned where it was justified. The implementation of trading activities based on a license in the country was terminated from July 1, 2024.