Many countries support entrepreneurs and IT companies through tax incentives and other benefits, establishing technology parks and special economic zones to create a comfortable working environment for programmers and internet-based businesses. In the post-Soviet space alone, there are more than twenty technology parks and SEZs, all competing for potential residents. The High Technology Park (HTP) in Kyrgyzstan was established in 2009 to provide a highly favorable environment for IT industry participants. The official legal framework is defined by the Law of the Kyrgyz Republic No. 84, dated July 8, 2011, “On the High Technology Park of the Kyrgyz Republic”, which regulates the requirements and conditions for HTP residents, as well as the park’s operations.
Who Can Become an High Technology Park Resident?
HTP residency is open to both legal entities, even branches and individuals, like sole proprietorship registered according to Kyrgyz law, including both local and foreign companies.
One of the main requirements for HTP residency is that more than 90% of the company’s revenue must come from IT activities that meet HTP’s criteria, and at least 80% of revenue must be generated from exports of services and products.
Eligible Activities for HTP Residency
To qualify for HTP residency, businesses must engage in one or more of the following activities:
- Software development, information system analysis, and design
- Export of IT technologies and software
- Operations of interactive service centers
One of the most significant advantages of HTP is its preferential tax regime, which allows residents to substantially reduce most taxes, with many tax rates reduced to zero.
Comparison of Tax Rates: General Tax System vs. HTP Residents
| Tax Type | General Tax Regime | HTP Residents |
|---|---|---|
| VAT (Value-Added Tax) | 12% | 0% |
| Corporate Income Tax | 10% | 0% |
| Sales Tax | 1-5% | 0% |
| Personal Income Tax | 10% | 5% |
| Social Contributions on Wages | up to 27.25% | 12% of the avg. salary |
Additionally, all HTP residents must pay a mandatory 1% contribution to the HTP administration.
For individual entrepreneurs (IEs) in the IT sector operating under the single tax system, the standard tax rate is 2% on revenue. However, with HTP residency, this rate is reduced to 1%.
However, HTP membership requires a mandatory annual audit, which typically costs around $1,000. Therefore, HTP residency is usually beneficial for businesses with an annual turnover exceeding $200,000.
HTP vs. the “Digital Nomad” Program
HTP is a tax regime, whereas “Digital Nomad” is a status that allows foreign IT professionals to stay in Kyrgyzstan without a visa, work permit, or mandatory local registration.
HTP Registration Process in Kyrgyzstan
The registration process consists of two stages:
- Initial Registration
- The company or individual entrepreneur submits documents for IP or LLC registration, along with details on business activities, development plans, and expected revenue.
- The HTP administration reviews the application within one month.
- If approved, the applicant becomes an HTP resident for an initial period of 6 months.
- Permanent Residency
- If the new resident complies with HTP requirements during the six-month period, they are granted permanent HTP residency status.
Key Requirements for High Technology Park Residents
- The business activities must comply with the HTP regulations and generate at least 90% of total revenue.
- At least 80% of the company’s revenue must come from international clients.
P in Numbers
- 383 companies are currently HTP residents.
- Over 2,500 jobs have been created.
- Products and services are exported to more than 60 countries, including the United States, Europe, Asia, and Africa.
For more details on HTP requirements and residency conditions, visit the official website: http://htp.kg.
Why Kyrgyzstan is an Attractive Destination for IT Business Relocation
Kyrgyzstan has become one of the most attractive countries for IT industry relocation, not only due to its favorable economic climate but also because of its natural beauty, climate, and cost of living.