The taxable period for profit tax is one calendar year.
The Tax Code stipulates that the Aggregate Annual Income Tax Declaration must be filed with the tax authorities by 1 March of the year following the reporting year.
Tax authorities may grant an extension for filing a tax return for up to one month upon application by the taxpayer. Such extension does not relieve or prolong the taxpayer's obligation to pay the tax in a timely manner.
Based on the Decree of the Kyrgyzstan Government #641, dated 31 December 2020, the mandatory submission of tax returns in the form of an electronic document was introduced as follows:
- Organisations/corporations from 1 April 2021.
- Individual entrepreneurs from 1 January 2021.
Payment of tax
Tax payments should be made as follows:
- Advance payments on profit tax: Taxpayers (except for zero-rated taxpayers and taxpayers exempt from profit tax) should file tax reporting and pay to budget a preliminary amount of profit tax on a quarterly basis (from the second quarter). The reporting period for the preliminary amount of the profit tax is established as the first quarter, first half year, and first nine months of the current fiscal period. The advance profit tax amount for the reporting period shall be determined in the amount of 10% of the profit calculated for the reporting period according to the rules established by Kyrgyz legislation on accounting. The advance profit tax amount payable to the budget for the reporting period shall be defined as the positive difference between the advance profit tax calculated for the reporting period and advance profit tax calculated for the previous reporting period.
- Final payments on profit tax: 1 March of the year following the reporting year.
- Tax withheld at the source of payment by a tax agent: By the 20th day of the month following the month when income was recognised.
Tax audit process
The State Tax Committee of the Ministry of Finance of Kyrgyzstan and its local tax authorities are the only state authorities that have the right to perform tax audits. The Kyrgyzstan tax service consists of relevant subdivisions of the revenue committee of the Ministry of Finance of Kyrgyzstan and its local authorities.
A tax audit is performed based on a written notification from the Head of the State Tax Inspectorate, which specifies the name of the company to audit, the scope of the audit, and the terms of the audit. Tax audits may be performed not more than once a year by one of the tax authorities (district, city, region, or the state tax authorities) and should not last more than 30 days (50 days for large level taxpayers). If necessary, however, a tax audit may be extended for ten additional days with written approval from the State Tax Inspectorate.
Statute of limitations
In general, the period of limitation for tax liability is six years. For taxpayers operating within the framework of obligatory/voluntary patents, the statute of limitations is three years.
Topics of focus for tax authorities
Generally, the Kyrgyz tax authorities focus on the support for profit tax deductions, correctness of tax calculations, and WHT issues during the tax audits. Recently, we have also observed a rising interest from the tax authorities in transfer pricing issues as well as sales tax and VAT on telecommunication companies.