Kyrgyzstan’s taxes is attracting more and more foreigners from neighboring countries due to its flexibility and low rates. Companies can choose between the general tax regime (10% corporate income tax) or a simplified system (2-6% of turnover) without income limits, which is a unique advantage compared to neighboring countries.
Residents of the High Technology Park (HTP) and the Creative Industries Park (CIP) are exempt from corporate income tax and export VAT, while tax reporting is simpler and requires less bureaucracy than in Russia and Kazakhstan.
General Taxes in the Kyrgyz Republic (GTR)
Corporate Income Tax
- Applies to LLCs (OsOO) and foreign companies with a permanent establishment, as well as individual entrepreneurs.
- The tax rate is 10% of net profit.
Value-Added Tax (VAT)
- Paid by companies under the general tax regime and importers.
- The rate is 12% of taxable transactions.
Personal Income Tax
- Paid by individuals earning income and tax agents making payments.
- The rate is 10% of income received.
Sales Tax
- Applies to businesses selling goods, services, and performing work.
- The rate is 1% for trade and manufacturing with cash payments and 2% for other activities. Cashless payments were previously exempt, but new rules apply from 2023.
Excise Tax
- Applies to companies that produce or import excisable goods.
- The rate varies depending on the product type.
Property Tax
- Paid by owners of real estate.
- The rate depends on the value and type of property.
Tax Benefits and Exemptions
Kyrgyz tax law provides relief for certain categories of businesses:
- VAT exemptions for exporters, educational and medical institutions, and agricultural producers. Special VAT exemptions also apply in the High Technology Park (HTP) and Creative Industries Park (CIP).
- Corporate tax benefits for companies operating in free economic zones (FEZs).
- Special conditions for small businesses, including simplified taxation options.
- Property tax exemptions for large families, pensioners, and veterans.
Tax Violations and Penalties
Failure to comply with tax laws results in fines and other penalties:
- Late filing penalty – 5,000 KGS for legal entities, 3,000 KGS for individual entrepreneurs.
- Late payment penalty – 0.1% of the outstanding tax amount per day.
- Tax evasion – If the amount exceeds 300,000 KGS, fines and possible criminal charges apply. If the debt exceeds 1 million KGS, imprisonment for up to five years is possible.
- Freezing of bank accounts in cases of repeated violations.
Simplified Taxes – Unified Tax System (UTS)
The Simplified Tax Regime (UTS) is designed for small and medium-sized businesses. Instead of multiple taxes (corporate tax, VAT, and sales tax), entrepreneurs pay a single tax at fixed rates.
Who Can Use the UTS?
- Available for individual entrepreneurs and LLCs (OsOO) whose activities are not prohibited (e.g., financial services, mining).
- To switch to UTS, businesses must submit an application to the tax authorities. The regime takes effect on the first day of the following month.
Tax Rates
The amount of tax depends on the type of activity and the form of payment.
| Type of Activity | Cash Payments (%) | Non-Cash Payments (%) |
|---|---|---|
| Trade | 4 | 2 |
| Manufacturing, processing, tourism, IT sector | 4 | 2 |
| Other industries | 6 | 4 |
| Restaurants, cafes (Bishkek, Osh) | 6 | 4 |
| Restaurants, cafes (other regions) | 4 | 2 |
| Construction services | 6 | 6 |
| Lotteries, gaming halls, saunas | 8 | 8 |
| Textile manufacturing (until 2027) | 0.25 | 0.25 |
| Creative Industries Park (2024) | 0.5 | 0.5 |
| Creative Industries Park (2025–2026) | 1 | 1 |
| Creative Industries Park (from 2027) | 2 | 2 |
| Online trading | 2 | 2 |
| Market and mini-market trade (if conditions are met) | 0 | 0 |
Reporting and Payment Deadlines
| Business Category | Reporting | Tax Payment Deadline |
|---|---|---|
| Small business | Quarterly, by the 20th of the month following the reporting period | By the 20th of the following month |
| Medium and large businesses, lottery sector | Monthly, by the 20th of the following month | Same deadlines |
Advantages of the Simplified Taxes System
- Reduced administrative costs – minimized reporting and simplified accounting.
- Exemption from certain taxes – corporate income tax, VAT, and sales tax are not paid.
- Flexible payment options – choice between cash and non-cash transactions.
- Optimized tax burden – lower rates for some industries.
For accurate tax calculations, it is essential to maintain separate accounting by type of activity.
Social Contributions
These contributions include payments to the Pension Fund and the Mandatory Health Insurance Fund (MHIF). The calculation method, rates, deadlines, and reporting requirements depend on the chosen tax regime: general or simplified (based on the unified tax).
Social Contribution Rates
| Payer Category | Employer (%) | Employee (%) | Fund Distribution |
|---|---|---|---|
| General Tax Regime (GTR) | |||
| Employees (except disabled persons of groups I and II) | 12 | 10 | Pension Fund: 18% State Accumulative Pension Fund: 2% MHIF: 2% |
| Employees with disabilities (groups I and II) | 8 | 2 | Pension Fund: 10% |
| Retired employees | 8 | 8 | Pension Fund: 16% |
| Simplified Tax System (Unified Taxes) | |||
| Employees (except disabled persons of groups I and II) | 4 | 10 | Pension Fund: 12% State Accumulative Pension Fund: 2% MHIF: 2% |
| Employees with disabilities (groups I and II) | 4 | 2 | Pension Fund: 6% |
| Retired employees | 4 | 8 | Pension Fund: 12% |
Note:
Special insurance contribution rates apply to employees engaged in textile and garment production, as well as residents of the High Technology Park and the Creative Industries Park.
Deadlines for Payment and taxes Reporting
The deadlines for the payment of insurance contributions and submission of reports depend on the payer category:
- Employers (General Tax Regime and Unified Taxes)
- Payment of contributions and submission of reports: monthly, no later than the 20th of the month following the reporting period.
- Individual entrepreneurs without employees
- Payment of contributions: monthly, no later than the 20th of the month following the reporting period.
- Submission of reports: annually, no later than March 1 of the year following the reporting period.
- Peasant (farmer) households
- Payment of contributions: in three installments:
- 20% of the annual amount – by April 25 of the current year
- 25% – by August 25
- The remaining 55% – by November 25
- Submission of reports: annually, no later than March 1 of the year following the reporting period.
- Payment of contributions: in three installments:
Note: If the deadline for submission of reports or payment of contributions falls on a non-working day, it is postponed to the next working day.
Medical Insurance and Pension Provision
In the Kyrgyz Republic, the compulsory medical insurance (CMI) system provides citizens with access to a basic package of medical services. CMI is funded by insurance contributions from employers and employees. Pension provision includes distributive and accumulative components, financed through insurance contributions to the Pension Fund and the State Accumulative Pension Fund.
Conclusion about Taxes
The General Tax Regime (GTR) in Kyrgyzstan regulates the activities of most businesses, ensuring stable budget revenues. Compliance with reporting and tax payment deadlines helps avoid fines and other penalties.
The Simplified Tax System (STS) based on the unified tax is a convenient tool for small and medium-sized businesses in Kyrgyzstan. It allows for reduced tax burdens, simplified reporting, and improved financial planning. In short, it is possible to establish a fully functional company in Kyrgyzstan remotely and operate under the simplified system without turnover restrictions on the account.
Special taxes in the High Technology Park (HTP) and Creative Industries Park (CIP) are suitable for high-tech companies.
The government is actively implementing digital tools to automate the tax reporting process, making business interactions with tax authorities more efficient.