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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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Kyrgyzstan Announces Tax Amnesty

The Kyrgyz government has introduced a tax amnesty as part of its efforts to ease the financial burden on citizens and stimulate economic activity. President Sadyr Japarov directed the government to draft the necessary legislation and submit it to the country's Parliament, the Jogorku Kenesh, for approval. One key measure is the abolition of the annual tax on movable property, previously ranging from $10 to $20 depending on vehicle engine capacity. Instead, this tax will now be incorporated into the price of gasoline, resulting in a one som (KGS) increase in fuel costs. “The Cabinet of Ministers of the Kyrgyz Republic is instructed to submit within two months a proposal to exempt vehicle owners from tax obligations unfulfilled as of January 1, 2025, provided there is no judicial act of recovery,” states the presidential decree. Tax Relief for Farmers and Entrepreneurs Farmers will benefit from a suspension of the agricultural land tax until 2030. Additionally, Japarov has prohibited tax authorities from conducting inspections of businesses except for unscheduled checks in cases where an organization or entrepreneur ceases operations. Citizens with tax debts as of January 1, 2022, will also be exempted from repaying those amounts. While the move has been welcomed by many Kyrgyz entrepreneurs, who see it as a step toward fostering business growth, it has also sparked mixed reactions. Some citizens who have already paid their taxes expressed frustration on social media, questioning the fairness of the amnesty. Changes to Tax Administration In a related development, Japarov instructed the Cabinet of Ministers to revise the system of electronic delivery notes used for monitoring business turnover and tax compliance. The updated system will retain electronic invoicing for a limited list of goods, with all other products exempt from such requirements. The recent reforms build on efforts initiated under Almambet Shykmamatov, the new head of the State Tax Service, to streamline Kyrgyzstan’s tax system and reduce administrative burdens on businesses.

taxes SMSEs small and medium businesses Small Business Legislation Tax

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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Kazakhstan’s Mining Association Proposes Reforming Mineral Extraction Tax

Aibar Dautov, head of Kazakhstan's Mining Industry Association, has called for reforms to the procedure for calculating the mineral extraction tax (MET) to boost budget revenues from oil and solid minerals. Speaking at the Astana Open Dialogue during discussions on the new tax code, Dautov noted that Kazakhstan currently employs ten different MET rates for crude oil taxation. These rates are determined based on two key factors: the price of oil at the time of sale and the annual production volume at a given field. The current tax structure is divided into the following production thresholds: 5% tax for annual production up to 250,000 tons 7% for 500,000 tons 8% for 1 million tons 9% for 2 million tons 10% for 3 million tons 11% for 4 million tons 12% for 5 million tons 13% for 7 million tons 15% for production up to 10 million tons 18% for production exceeding 10 million tons Dautov criticized this system as unfair to other sectors of the economy. “We believe the criterion of annual production volume should not exist at all. This differentiation has been in place for many years, but for some reason, it hasn’t been removed or acknowledged as a tax benefit. The Ministry of National Economy continues to support its inclusion in the new Tax Code. It’s unclear why this grading still exists—it should be eliminated and considered a relic,” Dautov stated. The complexity is even greater for solid minerals, according to Dautov, as their MET calculation currently involves 38 different tax rates for various types of minerals. The Times of Central Asia previously reported that Kazakhstan's Ministry of Industry and Construction has proposed replacing the current MET system with royalties. Under this system, taxes would be calculated based on the volume of sold products rather than the volume extracted. This change is scheduled to take effect on January 1, 2026, under new subsoil use contracts, while existing contracts will remain taxed under the current rates.

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Why Kazakhstan Wants to Change Subsoil User Taxation

Kazakhstan is considering a significant change in the taxation of subsoil users, with Minister of Industry and Construction Kanat Sharlapayev proposing the introduction of royalties to replace the current mineral extraction tax (MET) for licenses issued from January 1, 2026. According to Sharlapayev, this shift would attract more investors to Kazakhstan and encourage the domestic processing of raw materials. Why Investors Are Dissatisfied with MET The MET, introduced in 2008, is levied on subsoil users for every type of mineral, hydrocarbon, underground water, and therapeutic mud extracted in Kazakhstan. Each resource is taxed at a separate rate, calculated based on the volume of extracted raw materials rather than their actual sale or revenue. This has caused dissatisfaction among both local and foreign subsoil users. Over the years, discussions have intensified about replacing MET with royalties, which would calculate taxes based on the volume of products sold or profits earned. Sharlapayev stated during a recent government meeting that experts from the World Bank have recommended this change to make Kazakhstan’s mining sector more attractive to investors. “Globally, the most popular taxation model in the mining and metallurgical sector is based on the volume of products sold or profits earned. Kazakhstan, however, uses the mineral extraction tax. Introducing royalties tied to the sales value of minerals would be more transparent and familiar to international mining players,” Sharlapayev explained. Sharlapayev also emphasized that replacing MET with royalties would incentivize domestic production by imposing lower taxes on minerals processed within Kazakhstan compared to those exported without processing. He urged Prime Minister Olzhas Bektenov to instruct the Ministry of Finance and the Ministry of National Economy to include royalty provisions in the new Tax Code, expected to take effect in 2026. However, these changes would only apply to licenses issued from January 1, 2026. Concerns Over the Transition The Ministry of Finance has expressed reservations about the proposed shift, citing potential revenue losses. In September, Zhanybek Nurzhanov, Deputy Chairman of the State Revenue Committee, warned that transitioning to royalties could cost the state budget hundreds of billions of tenge. “We can switch to royalties only if there are no losses for the budget. If we simply introduce royalties and reduce business payments, it raises a serious question—how do we offset nearly half a trillion tenge in lost tax revenue?” Nurzhanov said. Additionally, Nurzhanov pointed out that determining the true value of exported raw materials would require the establishment of specialized laboratories, imposing financial burdens on both businesses and the state. This, coupled with the complexities of administering royalties, could deter subsoil users. Kazakh economist Galymzhan Aitkazin echoed these concerns, noting that MET’s fixed rates provide predictability for both businesses and the government, while royalties—tied to revenue or market prices—introduce variability. “The simplicity of flat MET rates allows companies to plan effectively and helps the government forecast revenues. By contrast, royalties linked to revenue or market prices could lead to payment variability, complicating financial planning for both parties,” Aitkazin explained. He also emphasized that MET’s straightforward...

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Kyrgyzstan to Introduce Tourist Tax for Foreign Visitors

Kyrgyzstan's capital Bishkek plans to introduce a tourist tax for foreign visitors staying in the city. The Kabar news agency reported that according to the draft resolution submitted by the mayor's office for public discussion, visitors will be charged 50 KGS (approximately 0.59 dollars) for every day spent in the Bishkek's hotels, hostels, campsites, guest houses, and holiday lets. The fee is not included in the cost of accommodation. Instead, operators will be obliged to advise their guests of the charges and collect the fee when they register their stay. Following the requirements of the Kyrgyz Republic's tax legislation, cash register machines are mandatory in all types of accommodation and the fee, paid in Kyrgyzstan's national currency, will be accepted either in cash or by bank card.