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Kyrgyz Businesses React With Cautious Optimism To Tax Amnesty

The Kyrgyz government has announced a tax amnesty aimed at easing the financial burden on businesses and reducing the workload of the State Tax Service (STS). However, local entrepreneurs have received the initiative with cautious optimism. As part of the amnesty, President Sadyr Japarov has decreed the exemption of taxes on agricultural land, the cancellation of private vehicle taxes for citizens, and the write-off of all tax debts accrued before January 1, 2022. The initiative has been met with mostly positive reactions from Kyrgyzstan’s business community. Entrepreneurs noted that many small and medium-sized enterprises in the country are burdened with significant debts to the state. They believe this measure has the potential to improve the business climate - provided the government maintains a stable and predictable tax policy. “Such decisions were likely made to support entrepreneurs during a challenging economic period, stimulate economic activity, and improve the overall state of business in the country. It could also be part of a broader strategy to foster trust between the government and the business community,” the JIA Business Association, one of Kyrgyzstan’s largest business groups, told the Times of Central Asia. By writing off debts, the JIA representatives said, the government will significantly ease the financial strain on businesses across various sectors. This would allow many entrepreneurs to focus on recovery and growth, particularly after the economic setbacks caused by the COVID-19 pandemic. Despite these positives, the association expressed concerns over the fairness of the tax amnesty. “We hope that the amnesty will also include those businesses that were declared debtors by court decisions, but remain unable to pay their debts to this day. Additionally, there are social businesses - such as those in education and healthcare - that are registered as non-profit organizations but still face tax burdens. Including these entities in the amnesty would ensure greater fairness and also ease the workload of the tax service,” a JIA spokesperson explained. However, under the presidential decree, businesses or individuals with tax debts resulting from court rulings are not eligible for the amnesty. The Kyrgyz presidential administration estimates that the amnesty will result in the write-off of approximately 11 billion KGS (around $126 million) in tax debts for over 20,000 businesses. But while this decision is welcomed by many, it has drawn criticism from some quarters. Market representatives argue that the amnesty may be unpopular among diligent taxpayers who have consistently fulfilled their tax obligations and do not owe the state. Nonetheless, they acknowledged that the government’s decision demonstrates a willingness to be flexible. This includes addressing other concerns, such as issues surrounding the introduction of electronic commodity invoices, which have been controversial among entrepreneurs. “In the past three years, there has been significant progress in reforming tax administration. We anticipate further reforms, such as limiting the application of electronic goods invoices (ETNs) to specific types of goods or simplifying their use for small and medium-sized businesses. Efforts to improve digital tools for businesses, streamline tax administration, and increase public and business...

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Amid Discontent Among Entrepreneurs, Kyrgyz Authorities Ease Tax Burden

Kyrgyz President Sadyr Japarov has instructed the new Prime Minister Adylbek Kasymaliev and the head of the State Tax Service (STS) to develop a new fiscal policy that will not overburden citizens or force entrepreneurs to conceal their income. Special attention is to be paid to electronic bills of lading (EBL). Following a corruption scandal in the STS, the new head of the tax service, Almambet Shykmamatov, proposed abolishing the EBLs introduced by the government in the summer of 2024. At a parliamentary session, Shykmamatov explained that the EBLs were implemented to combat the shadow turnover of goods. However, the new reporting system has sparked numerous complaints from entrepreneurs. Shykmamatov stated, "I will find those who implemented the EBL system improperly and without analysis and ensure they are held accountable. I will explain what populism is and why simply raising taxes and calling it economic growth is unacceptable." EBLs (electronic bills of lading) replaced the so-called voluntary patents that entrepreneurs and market traders used to purchase monthly as a form of tax payment. Later, during a government meeting, Kasymaliev, head of the Kyrgyz Cabinet of Ministers, confirmed that despite widespread public protests, the authorities do not intend to abolish EBLs entirely but assured that the Cabinet will work to simplify the system and will study the possibility of revising the list of goods to be included in the reporting of EBL. The Times of Central Asia surveyed entrepreneurs who have been most affected by EBLs. Venera Mugalimova, a seller of electrical building supplies at a Bishkek market, said, "The introduction of EBLs has severely complicated my life. This system is unfeasible for me and all vendors working on consignment sales. In such cases, we first receive the goods, sell them, and only then settle the payment. The system doesn’t recognize 'consignment goods.' The company providing the goods on consignment cannot issue me an invoice without payment.” According to sellers, individuals offering paid training on how to use the EBL system have started to appear in Kyrgyzstan's online space, and their services are in high demand. "It’s a massive headache, although it depends on your business type. In my case, we deal with many small items—about 5,000 different products. Manually entering the name, price, and exchange rate for each product is problematic and very time-consuming," Alena, a wholesale seller of fabrics and clothing at Dordoi Market, told The Times of Central Asia. Her company not only sells goods but also imports them from nearby countries. "With EBLs, I lose a lot of time. Either I focus on reporting or work. Combining both is very hard, and we’d need to hire at least three accountants for the number of outlets we have. That’s additional expenses," the businesswoman noted. Sergey Ponomarev, President of the Association of Markets, Trade Enterprises, and Service Industries, commented to The Times of Central Asia that moving away from the patent system was crucial in combating the shadow economy. However, the current situation with EBLs looks less than optimistic.

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“Success is Possible in Kazakhstan”: An Interview with Fashion Brand Qazaq Republic

Qazaq Republic has become a popular brand among young people in Kazakhstan. The brand has become a success story for entrepreneurship within Kazakhstan and Central Asia. The Times of Central Asia spoke with Yermek Kazym, co-founder and former CEO, to learn more about the brand, its message, and how it achieved its success. TCA: Qazaq Republic celebrates Kazakhstan’s heritage through fashion. What inspired the brand's creation, and what is its story? When the founder of Qazaq Republic, Saken Joldas, was studying in the US, he would always bring gifts from Kazakhstan for his friends. But the available options were always uninspiring. This led him to dream about creating something more appealing to showcase modern Kazakhstan's vibrant youth culture and style. In 2016, when the mayor of Almaty announced a competition to design a new city logo, Saken shared his designs with the public. He created digital versions of the design to print on mugs and t-shirts and posted them on Facebook. The response from the community was incredible—people loved the concept and showed great interest in purchasing the items. That’s how the idea for the brand began to take form, starting right in his kitchen. The first big order came from the Duty-Free store at Almaty Airport. They requested around 30 t-shirts to sell. As the business grew, Qazaq Republic was given space at the biggest toy and bookstore in Almaty, Meloman. With the rise in sales, we decided to open QR’s very first store. When designing it, we even considered adding a coffee shop in case the store didn’t work out. QR’s first store opened in November 2019 on 47 Mametova street, but then the pandemic hit. While malls were closing, our store had the advantage of being a standalone store. To help people feel better during difficult times, we created unique cotton masks with the phrase “Bari jaqsy bolady” (Everything will be alright). Instead of selling them, we gave them free of charge with orders over 5,000 tenge. Customers started placing smaller orders just to get these masks, giving us a strong sense of support and confidence that we were on the right track. TCA: Could you walk us through the creative process of designing a typical Qazaq Republic collection? We’ve built a solid foundation now. People used to think we were just buying ready-made items and putting our logo on them, but that's not the case. Like global brands such as Nike and Ikea, we design our products in Kazakhstan while outsourcing production and manufacturing to trusted partner factories in Turkey and China. We oversee every detail, from creating labels and designs to developing patterns, ensuring complete control over the process. This approach allows us to concentrate more on perfecting our products. The brand's uniqueness lies in creating products that make everyday life comfortable and functional while staying modern and high-quality. TCA: Who is the target audience for Qazaq Republic, and how has it evolved since the brand’s inception? When we first launched our brand, we assumed...

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Kyrgyzstan Invests Over $356 Million in Women’s Entrepreneurship

The development of women’s entrepreneurship in Kyrgyzstan has received significant financial backing, with more than $356 million directed to supporting women-led businesses since the establishment of the OJSC (Guarantee Fund). According to the OJSC, in the first ten months of 2024 alone, 1,088 guarantees were issued to women, accounting for 40% of the total guarantees provided by the Fund during this period. To date, the Fund has issued 4,071 guarantees totaling 3.166 billion soms ($356 million), empowering women across all regions of Kyrgyzstan to launch and expand businesses in various sectors. Women’s entrepreneurship is becoming an increasingly vital component of Kyrgyzstan’s economy. According to the United Nations Development Programme (UNDP), women currently lead 29% of the country’s small and medium-sized enterprises. Bishkek recently hosted Expo 2024 “Women’s Entrepreneurship,” which showcased the accomplishments of women entrepreneurs while highlighting their growing role in driving innovation and economic growth. Furthermore, the Women’s Entrepreneurship 2024 program reported that 48% of all loans issued this year were granted to women, reflecting the expanding support for women-led businesses across the country. This upward trend highlights the growing recognition of women entrepreneurs as key players in Kyrgyzstan’s innovation ecosystem and economic development.

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Kyrgyzstan Unveils Ambitious Growth Plans at People’s Kurultai

On December 20, Bishkek hosted the third People’s Kurultai (Congress), a platform for direct dialogue between representatives of local communities from across Kyrgyzstan and the country’s top leadership. The event featured opening remarks by President Sadyr Japarov and a detailed address by newly appointed Chairman of the Cabinet of Ministers, Adylbek Kasymaliyev, who outlined the government’s economic priorities and strategic plans for the future. Japarov set the tone for the event by sharing his vision for Kyrgyzstan’s development priorities. He announced that construction of the long-anticipated China-Kyrgyzstan-Uzbekistan railway will commence on December 27. Kasymaliev, in his address, emphasized Kyrgyzstan’s ability to sustain economic momentum, citing the country’s 9% annual GDP growth rate over the past three years. He highlighted key initiatives aimed at transforming Kyrgyzstan’s economic landscape, including: Strategic Infrastructure Projects: Kasymaliyev underscored the significance of the China-Kyrgyzstan-Uzbekistan railway, which is expected to create new economic centers and logistics hubs, effectively positioning Kyrgyzstan as a "land port" in the region. Hydropower and Renewable Energy: As a reliable partner in Central Asia’s hydropower sector, Kyrgyzstan will continue collaborating with Kazakhstan and Uzbekistan on the flagship Kambarata-1 hydroelectric power plant. Kasymaliyev also announced plans to expand solar and wind energy, eliminate state monopolies in the energy sector, and create conditions to attract private investment. Agriculture and Food Security: The government will prioritize agricultural processing to add value to raw products, ensuring food security and bolstering rural economic development. Construction as an Economic Driver: With construction contributing 7.4% of Kyrgyzstan’s GDP - a tenfold increase since 2013 - Kasymaliyev called the industry a vital indicator of economic growth. He noted that construction has significantly improved citizens' well-being over the past three years. Government’s Strategic Goals Kasymaliyev laid out an ambitious roadmap for the Cabinet of Ministers, aiming for the following by 2030: Economic Growth: Maintaining a GDP growth rate of 9% and achieving a GDP of $30 billion. Income Growth: Raising GDP per capita from $2,500 to $4,000. Economic Transition: Shifting from a services-oriented economy to an industrial-agrarian model. Support for Small and Medium Businesses: Increasing their share in GDP from the current 40.5% to 50%. Poverty Reduction: Lowering the poverty rate to 17%. Education Expansion: Ensuring 80% of preschool-age children have access to kindergarten. Kasymaliyev’s address underscored the government’s commitment to comprehensive economic reforms and regional cooperation. His plans reflected an optimistic vision for Kyrgyzstan’s development while addressing key challenges in energy, infrastructure, and social services.

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Kyrgyz Entrepreneurs Urged to Legalize Income

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.