Indirect tax

Indirect tax - Kyrgyzstan

01 Jan 202511 min read
This tax guide provides an overview of the indirect tax system and rules to be aware of for doing business in Kyrgyzstan.

Kyrgyzstan - 120x120.png

Indirect tax snapshot
What are the current rate(s) of Indirect Tax? 

1. Value Added Tax  (VAT)

  • Standard rate of 12% for most goods and services.
  • Zero rate for some goods and services including:
    • Export of goods,
    • Processing of goods made on commission imported from EEU member states,
    • International rail transport,
    • Services connected with transit flights of aircraft and services connected with international carriage,
    • Services, connected with electric power supply of pumping stations, engaged in irrigation of agricultural lands, providing population with potable water,
    • Supplying goods, work and services to FEZ (free economic zone) entities.
  • Exemptions:
    • financial services,
    • insurance,
    • agricultural goods and services,
    • utility services,
    • sales of fixed assets under a finance lease,  supply of goods related to Islamic finance operations,
    • supply of medicines (approved list),
    • public sector organizations, education, charity,  non-profit organizations,
    • transportation services by air, sea and land transport
    • supply and export of metal-bearing ores, concentrates, alloys and refined metals.

2. Sales tax:

  • 2% for banks,
  • 5% for activities in the mobile communication sector and the sale of virtual assets,
  • 2% for business entities engaged in the sale of newly constructed residential and non-residential premises,
  • 2% for insurance (reinsurance) organizations,
  • 1% for pension savings funds, unless otherwise specified,
  • 1% for trading activities and goods production when selling VAT-taxable goods, works, or services,
  • 2% for other activities involving VAT-taxable goods, works, or services,
  • 2% for trading activities and goods production when selling non-VAT-taxable or VAT-exempt goods, works, or services,
  • 3% for other activities involving non-VAT-taxable or VAT-exempt goods, works, or services,
  • 2% for non-cash payments and 3% for cash payments for sales of goods to entities operating under a patent-based system, as well as certain other specified entities,
  • 4% for sales to anonymous entities,
  • 1% for payments made in a non-cash form and 3% for payments made in cash for entities operating under a special trade zone tax regime.

 Exemptions:

  • The sale of goods, performance of work, and provision of services are exempt from sales tax if conducted by:
    • an agricultural producer and/or a machine and tractor station;
    • an agricultural cooperative;
    • a society of persons with disabilities, an organization, or an individual entrepreneur where persons with disabilities (except for individuals with a Group 3 disability due to general illness) constitute at least 50% of the total number of employees, and their wages amount to at least 50% of the total payroll. The list of such societies, organizations, and individual entrepreneurs is determined by the Cabinet of Ministers;
    • preschool educational institutions (private kindergartens);
    • industrial enterprises engaged in activities subject to preferential taxation, as established by Part 1 of Article 183 of this Code (excluding mining and processing enterprises, as well as enterprises producing excisable goods);
    • taxpayers registered and operating in preferential border settlements;
    • private medical institutions specializing in cardiac surgery, as well as dialysis services for individuals with end-stage chronic renal failure;
    • services related to religious rituals, ceremonies, and pilgrimages;
    • charitable organizations;
    • under an agreement on a socially significant facility in the manner and under the conditions established by Part 2 of Article 295 of this Code;
    • an association of legal entities, an employers' association, or a public association providing services to its members and/or participants;
    • the provision of pension services, services related to pension and benefits payments, and traditional postal services by designated postal operators with more than 50% state ownership, operating under a postal communication license.
  • The sale of goods, performance of work, and provision of services by a non-commercial organization are exempt from sales tax, provided that the payment does not exceed the costs of selling such goods, performing such work, or providing such services:
    • for social security and protection of children or low-income elderly citizens;
    • in the fields of education, medicine, science, culture, and sports;
    • for the rental of property owned in common by residents of a multi-apartment building, provided by housing owners' associations.
  •  The sale of the following is exempt from sales tax:
    • electricity, heat energy, and natural gas to individuals for household use;
  • by a bank:
    • refined standard and measured gold and/or silver bars, investment coins;
    • fixed assets or goods under financial lease agreements and agreements under Islamic financing, except for interest income under such agreements;
    • refined standard and measured gold and/or silver bars,investment coins sold by a refinery that is a certified domestic organisation of the London Bullion Market Association.
    • Goods intended for the development of sports, sold to entitites determined by the Cabinet of Ministers, are exempt from sales tax.The list of goods intended for sports development is approved by the Caninet of Ministers.

 

Are there any confirmed or anticipated changes to these rates?

No.
What is the principal indirect tax?
  1. Value Added Tax (VAT) is the principal indirect tax in Kyrgyzstan. VAT is imposed on the value of sales of goods and services, taxable imports, as well as services received from foreign companies.
  2. Sales tax is paid based on turnover.
Is there a registration limit for the tax?
Since January 1, 2022, companies operating on the basis of the general system of taxation become automatically VAT payers.  Sales tax is also part of general system of taxation.Companies operating on the basis of the simplified system of taxation are not payers of VAT on supplies of goods and services and sales tax.VAT on imports and VAT on receiving services from foreign companies must be paid by all companies, regardless of the type of taxation system.
Does the same registration limit apply to non-established businesses?
No.
Does a non-established person need to appoint a fiscal representative in order to register?
No.
How often do returns have to be submitted?
VAT returns must be submitted every month.Sales Tax report to be submitted on monthly or quarterly basis (report period depends on turnover of the company).
Are penalties imposed for the late submission of returns/payment of tax? 
Yes. Late submission or payment leads to penalties. 
Are any other declarations required?
Yes.
  • Additional declarations must be submitted for transactions, supply or purchase within Customs Union (Russia, Kazakhstan, Kyrgyzstan, Belorussia, Armenia).
  • Report on VAT on services received from foreign companies.
Are penalties imposed in other circumstances?
Yes. Penalties can be imposed for underreporting tax.
Can the tax incurred by overseas businesses be claimed if they are not registered in your country?
When paying income to a foreign company for services, VAT must be withheld, paid and return submitted.
Deduction of VAT
Company may deduct VAT from its purchases or VAT paid for import.Non-deductible:
  • VAT on goods purchased to sell or provide services exempt from VAT.
  • VAT on the acquisition of goods or services for non-income generating activities.

 

Please click on each section to expand further:

Value Added Tax (VAT) is the main type of indirect taxation in Kyrgyzstan.

It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods, and certain services, entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the business making the supply ie the sale.

A business registered for the tax will charge VAT (output tax) on its sales and incur VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax the amount can be submitted as prepayment for next month. (Also, it may be claimed to refund, but in practice it is unlikely).

A transaction is within the scope of Kyrgyzstan VAT if the following conditions are met:

  • taxable supply (sales of goods or providing services),
  • taxable import of goods.

VAT for payment for the services of a foreign company. The standard rate is 12%. In addition, some goods and services are exempted from the tax and for some goods and services, the VAT is 0%.

Businesses that make exempt supplies are unable to claim all of the input tax that they incur, so the VAT paid to suppliers will be a ‘real’ cost.

Most goods imported into Kyrgyzstan from outside are subject to VAT. The tax will have to be paid by the importer at the time of importation. Where the importation is for business purposes and the importer is registered for VAT, it may be possible to reclaim the tax (subject to certain rules).

Sales tax is paid based on turnover, and the rates are:

  • 2% for banks,
  • 5% for activities in the mobile communication sector and the sale of virtual assets,
  • 2% for business entities engaged in the sale of newly constructed residential and non-residential premises,
  • 2% for insurance (reinsurance) organizations,
  • 1% for pension savings funds, unless otherwise specified,
  • 1% for trading activities and goods production when selling VAT-taxable goods, works, or services,
  • 2% for other activities involving VAT-taxable goods, works, or services,
  • 2% for trading activities and goods production when selling non-VAT-taxable or VAT-exempt goods, works, or services,
  • 3% for other activities involving non-VAT-taxable or VAT-exempt goods, works, or services,
  • 2% for non-cash payments and 3% for cash payments when selling goods to entities operating under a patent-based system, as well as certain other specified entities,
  • 4% for sales to anonymous entities,
  • 1% for payments made in a non-cash form and 3% for payments made in cash for entities operating under a special trade zone tax regime.

From January 1, 2022, VAT is a permanent tax under the common taxation system. Sales tax is also part of common system of taxation.

Only companies operating on the basis of the simplified taxation system are not VAT and sales tax payers.

VAT on import and VAT on services of foreign companies is compulsory for all types of taxation systems.

No.

According to the Tax Code of Kyrgyz republic a foreign company providing services in electronic form without using a domain name or IP address registered in the Kyrgyz Republic must complete online tax registration only to pay VAT.

A foreign company providing services electronically using a domain name or IP address registered in the Kyrgyz Republic must register a branch and pay all taxes.

No.

VAT returns have to be submitted every month. The deadline is 25th of subsequent month.

Sales Tax report to be submitted on monthly, by the 20th of subsequent month.

The tax authority may impose a default surcharge penalty if VAT returns are not submitted on time, or the related tax is not paid by the due date.

Penalty for late payment is 0.09% per day and penalty for late submission is 5000-13000 soms.

  • Additional declarations have to be submitted for transactions, supply or purchase within Customs Union (Russia, Kazakhstan, Kyrgyzstan, Belorussia, Armenia).
  • Report on VAT on services received from foreign companies.

Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.

Rules for use and filling VAT invoices is strict.

Criminal proceedings may be brought in the case of serious matters.

No.

 

Tax authority assigns unique VAT invoice number to every company applied.

A VAT invoice must show:

  • an invoice number which is unique and sequential,
  • bank account information for both supplier and customer,
  • the seller's name and address,
  • the seller's Tax registration number,
  • the invoice date,
  • the time of supply (also known as tax point) if this is different from the invoice date,
  • the customer's name and address,
  • a description sufficient to identify the goods or services supplied to the customer,
  • the total amount of VAT.

For each different type of item listed on the invoice, the following must be shown:

  • the unit price or rate, excluding VAT,
  • the quantity of goods or the extent of the services,
  • the rate of VAT that applies to what's being sold,
  • code of VAT supply,
  • the total amount payable, excluding VAT,
  • the total amount of VAT.

Where a business makes retail sales and makes a sale of goods or services VAT, a single VAT invoice can be issued for one month.

 

At the moment, all VAT invoices are issued only electronically and are reflected online in the tax authority and with the customer.

Contact us

For further information on indirect tax in Kyrgyzstan please contact:

Armen Vanyan, Managing Partner
T:  +996312979490
M: +996770228877
E:  armen.vanyan@kg.gt.com

Zoya Niyazgulova, Accounting and Tax Advisory Department
T: +996312979490
M: +996500817909
E: zoya.niyazgulova@kg.gt.com

International indirect tax guide
Read this article
International indirect tax guide
TAGS