Kyrgyz entrepreneurs have been reminded to legalize their assets as the period for voluntary declaration of income and property nears its end on December 31, 2024. From January 2025, authorities are set to launch extensive inspections of businesses, prompting Temir Sariev, head of the Chamber of Commerce and Industry (CCI) of Kyrgyzstan, to call on business owners to act promptly.
The law on voluntary legalization and amnesty of assets, introduced in 2023, offers citizens a chance to declare their assets with state guarantees of protection against criminal prosecution. By participating in the program, individuals and businesses can secure the preservation of their declared assets.
As previously reported by The Times of Central Asia, in an effort to accelerate this process, President Sadyr Japarov set a public example in early 2024 by legalizing a multi-story building in Bishkek valued at $20 million.
Temir Sariev emphasized that legalizing assets will improve economic transparency, protect citizens’ social and economic rights, and enhance Kyrgyzstan’s attractiveness to investors.
“An obvious benefit of asset legalization is the reduction of the shadow economy,” Sariev noted. According to the Ministry of Economy and Commerce, the shadow economy accounted for approximately 20% of GDP in 2023, although unofficial estimates suggest it could be twice as high. International examples indicate that asset and income legalization reduces the size of the informal sector, increases transparency, fosters competition, and attracts new investments.
While the potential advantages include increased tax revenues and improved public infrastructure, Sariev acknowledged the challenges for businesses transitioning out of the shadow economy. Small and medium-sized enterprises (SMEs) accustomed to operating informally may face difficulties adjusting to legal frameworks and potentially higher tax burdens.
To address these challenges, Sariev highlighted the need for new accounting systems, staff training, and significant government investment in modernizing tax administration.
This summer, the Kyrgyz government introduced changes to the taxation system, replacing voluntary patents – used by hundreds of thousands of businesses and individuals – with a mandatory payment system based on cash register accounting. The shift aims to increase transparency and accountability in the private sector.
The Chamber of Commerce and Industry continues to encourage businesses to take advantage of the current voluntary declaration period to ensure smoother compliance with the evolving economic landscape.
