Kyrgyzstan introduces tax incentives

The Kyrgyzstan Parliament adopted a draft of a new law that provides for tax incentives for companies with a preferential scope of business. Legal entities with a scope of business that falls under the description of preferential activities (except mining and mineral processing activities) are now subject to nil corporate income tax rate. Moreover, the competent tax authority may provide an additional tax exemption in terms of property and land tax in case the company meets certain requirements.

The above mentioned tax reliefs could be applied for a maximum period of 10 years while the initial granted period is for 5 years. The possible extension is up to additional 5 years, depending on the amount of revenue and the amount of the respective corporate income tax. Also, an agreement is to be concluded between the company and the authority with the investment purpose where certain conditions and rules must be followed.

The new Tax Code – and particularly article 159-1 – lists the scope of business to which the favorable tax regime in Kyrgyzstan can be applied. Currently, certain business activities are granted these incentives due to their lack in the market. These include:

·         industrial production with innovative technologies and know-how;
·         food and light industry;
·         energy sector;
·         agricultural business;
·         assembly of goods on the territory of Kyrgyzstan;
·         export and trade businesses.

The government will periodically vary the types of businesses included in the regime and every 5 years a list with the exact scope of activity shall be published.

Petar Varbanov
Attorney at Law