Kyrgyzstan

Citizens of the Kyrgyz Republic who are tax residents of the country must pay taxes on their worldwide income. Citizens of Kyrgyzstan who are not residents for taxation purposes and foreign citizens shall only pay taxes on income received from sources in Kyrgyzstan.

The single flat 10% rate applies to most kinds of individual income.

According to the Tax Code, resident companies are subject to a corporate income tax, which is called profit tax, on their aggregate worldwide annual income.

Profit tax is paid at the rate of 10% of the aggregate annual income (allowed deductions apply).

E-commerce tax may be imposed on organizations engaged in the following activities:

• provision of services in electronic form based on the use of a domain name or IP address registered in Kyrgyzstan
• business of a seller and/or operator of an e-commerce website shall be conducted in accordance with e-commerce legislation of Kyrgyzstan.

E-commerce tax shall be paid instead of the following taxes:

• Profit tax;
• VAT on taxable supplies;
• Sales tax.

The e-commerce tax rate is 2%.

The tax period for e-commerce tax is a quarter.

In Kyrgyzstan, VAT is imposed on taxable supplies and taxable import. The VAT rate is 12%, except for some supplies with a zero rate and certain turnover exempted from tax.

Income of a non-resident that is considered income from sources in Kyrgyzstan not connected with sole proprietorships is subject to withholding tax, with no deductions, at the following rates:

• Dividends and interest – 10%;
• Insurance premiums received under risk insurance contracts or reinsurance contracts – 5%;
• Author’s fees and royalties – 10%;
• Income from international telecommunications or freight services and transportations between Kyrgyzstan and other countries – 5%;
• Other services and activities – 10%.

Withholding tax applies to income received from sources in Kyrgyzstan, whether the payment is made in or outside Kyrgyzstan.

Application of double taxation treaties often ensures decrease of withholding tax rates or exemption from income tax.

Real estate tax is imposed on:

• legal entities in Kyrgyzstan and foreign legal entities;
• individuals who own real estate in Kyrgyzstan, including property received under finance lease or mortgage contracts.

Taxable real estate is classified into the following groups:

• Group 1 – houses, flats, country houses (cottages), other buildings and facilities as well as annexes to garages and separately built garages not used for business activity;
• Group 2 – houses, apartments, vacation hotels, holiday houses, sanatoria, resorts as well as production, administrative, industrial and other buildings and facilities meant or used for business activity;
• Group 3 – temporary premises of metal and other constructions, for example, kiosks and containers meant and/or used for business activity;
• Group 4 – vehicles, including self-propelled vehicles and mechanisms.

None.

Payers of social insurance contributions are legal entities (employers), farms and individuals. The calculation base normally includes the gross remuneration of local and foreign staff. According to the Compulsory Social Insurance Contributions Regulations, the effective rates are:

Employer:

• Social contributions – 2.25% (2% to the compulsory social insurance fund, 0.25% to the employees’ health fund);
• Pension contributions – 15% (3% in respect of foreigners temporarily living in Kyrgyzstan).

Employee:

• State pension savings fund – 2%;
• Pension contributions – 8%.

None.

Even though Kyrgyzstan does not have a special law on transfer pricing, the Tax Code contains transfer pricing rules. General provisions on transfer pricing contained in the Tax Code do not agree with recommendations of the Organization for Economic Co-operation and Development (OECD), so there is no mechanism for an Advanced Pricing Agreement (APA).

According to the transfer pricing legislation of the Kyrgyz Republic, tax authorities have the right to determine the cost of the following transactions:

• Related party transfers;
• Barter transactions;
• Cross-border transactions.

Provisions of transfer pricing rules have also been elaborated that grant tax authorities the right to control transfer pricing of transactions with goods for which a minimum target price has been set.

Kyrgyzstan has entered into 33 Double Tax Conventions (DTCs) with the following jurisdictions:

33 DTCs: Austria, Armenia, Belarus, Canada, China, Czech Republic, Estonia, Finland, Germany, Georgia, Hungary, India, Iran, Kazakhstan, Korea, Kuwait, Latvia, Lithuania, Malaysia, Moldova, Mongolia, Poland, Qatar, Russia, Saudi Arabia, Tajikistan , Turkey, Turkmenistan, UAE, Ukraine, United Kingdom, Uzbekistan, Switzerland.

Kyrgyzstan has not yet signed the Multilateral Convention to Implement Tax Treaty Related Measures to Prevent Base Erosion and Profit Shifting (MLI).

Foreign exchange regulation is quite mild in Kyrgyzstan. The regulator is the National (Central) Bank of Kyrgyzstan.

Non-residents can freely buy or sell foreign currencies at banks’ foreign exchange offices or at foreign exchange bureaus as well as open foreign currency bank accounts.