Kyrgyzstan’s President Declares Own Multi-Million Dollar Property as Part of Asset Legalization

The President of the Kyrgyz Republic, Sadyr Japarov has said that he wants top business people and wealthy citizens to repatriate their assets to Kyrgyzstan instead of storing it abroad - which is why he has decided to start with himself. Last summer, Kyrgyzstan adopted a law on legalization - or declaring assets to the government - of property. According to official statements, its main goal is to transition the property and income of individuals from the shadow economy into legal economic activity through voluntary declaration of assets. The law stands until July 1st, 2024. "Voluntary legalization of and amnesty [for] assets will allow [the nation] to bring some shadow assets into legal turnover, which, as a consequence, will contribute to an increase in legal economic activity. According to the National Statistical Committee of Kyrgyzstan, the shadow economy accounts for 21% of the republic's GDP, and according to unofficial data, the shadow economy accounts for 40% of the republic's GDP. In this regard, the voluntary legalization and amnesty of assets of individuals is part of the preparatory stage of the transition to universal declaration," reads the law's background note. Image: Japarov Facebook post The president noted that all large and medium-sized business people used to register their property in someone else's name to avoid paying taxes to the state, and he was among them because he entered into politics from business. He lamented the fact that the richest citizens still keep their billions in foreign banks. Under the law, authorities guarantee that of all tax declarations previously submitted to state agencies will not be subject to prosecution. This is to give assurance to anyone seeking amnesty that the state will honor current assessments of income and property that have been legalized. The document states that if the amount a person legalizes exceeds 100 million som ($1,100,000), the submitting citizen must pay a so-called declaration payment of one million som ($11,000) to the state. "The value of my property is about 20 million dollars. I paid one million som to the state for the purpose of legalization. This is required by law. I have no savings abroad, and if I had, I would have invested them in our banks," the president wrote. Japarov said he constructed a building in the center of the capital back in 2010, but because of political persecution by the previous authorities, he had to hide the fact the multi-story building belonged to him. Now, he has registered the building under his own name. The head of state stressed that based on the law, the authorities guarantee all citizens the safety of legalized capital: "There is no other goal. There will be no questions [put] to you." The president noted that he's the first to legalize his property, despite the fact that the law came into force more than six months ago. At the end of last year, Japarov also urged owners of markets and large retail outlets to transition their assets out of the shadow economy....

Kazakhstan Uses Income Declaration to Fight the Shadow Economy

Kazakhstan's third stage of universal income declaration is underway. As part of the current stage, declarations must be submitted by entrepreneurs, company founders and directors, and their spouses. In 2025 yet another new stage of declarations, will commence which will oblige all adult citizens to submit declarations. Currently, many entrepreneurs and small business owners use mobile transfers, which are intended for personal purposes. Such actions are illegal and violate the guidelines of the Entrepreneurial Code - Article 27, which stipulates that an entrepreneur may only use business accounts when carrying out commercial activities. It's specified in the law that mobile transfers and payments made for personal purposes are not taxable. Regarding taxation of individuals in Kazakhstan, every adult citizen is obliged to pay taxes to fund the budget. Currently, individuals pay taxes applicable to their wages. One tax and two mandatory contributions are withheld from an employee's official salary in Kazakhstan: Individual Income Tax (IIT); contributions for compulsory medical insurance (VOSMS); and mandatory pension contributions (MPC). Individual income tax (IIT) is levied on the income of employees and transferred to the state treasury by the employer. According to Article 322 of the Tax Code, such income includes wages and salaries. In addition, income classified as in-kind (transfer of goods, securities, provision of services to an employee, non-paid transfer of property, etc.) and material benefit (cancellation of debt to an employee, sale of goods to them, etc.) are subject to personal income tax. According to paragraph 1 of Art. 320 of the Tax Code, the individual income tax rate for all types of income is 10%. All Kazakhstan citizens who have a car are also subject to transportation tax. It includes excise tax on fuel and lubricants -- the larger the engine volume of the car, the higher the tax burden due to high consumption of fuel and lubricants; a vehicle tax -- the larger the engine displacement, the higher the tax burden; utilization fee, and fee for the initial registration of a motor vehicle. Real estate owned by citizens is also taxed in Kazakhstan. The amount of tax depends on one's type of property and is calculated for each object separately. The value of property for tax purposes is determined on the basis of a formula by multiplying several indicators: the base cost per square meter, which depends on the specific city or type of settlement; usable area of the property ( in sq. m.); a coefficient indicating the physical deterioration of the dwelling, which is determined by taking into account the age of the building from the date of commissioning and depreciation; a functional wear coefficient, which depends on the floor, location, amenities, engineering condition and type of heating; a zoning coefficient, which takes into account the location of the property in a particular community; and the MRP change factor, which shows how much this indicator has increased compared to the previous year.