Foreign tax credits
There is no possibility to offset the amount of tax paid outside Kyrgyzstan against the Kyrgyz tax if there is no double taxation treaty (DTT) with the country.
Kyrgyzstan has an article in the Tax Code regarding the specifics of profit taxation on earnings from large investments. Based on the article, profit earned by a local company from own-produced or re-processed goods in Kyrgyzstan using only new equipment (not used or bought before 1 May 2015) is subject to 0% profit tax if the taxpayer has:
- annual turnover exceeding KGS 170 million
- monthly profit tax exceeding KGS 150,000, or
- charter capital of the local company exceeding KGS 10 million.
Please note that companies in the tobacco, mining, alcohol, retailing, and information technology (IT) sectors are not able to apply such incentives to their profit.
Moreover, dividends of a foreign company that engaged in large investment projects in Kyrgyzstan, not related to PE activities in Kyrgyzstan, received as part of the profit with 0% profit tax are subject to 0% WHT.
Special economic zones
There are four special economic zones in Kyrgyzstan: Naryn, Karakol, Bishkek, and Maimak. The special economic zones generally provide for a tax-neutral regime, exemption from customs duties, and a liberal currency control regime. However, there is a special fee for incentives, which varies from 0.1% to 2% of sales (depending on the region).
Park of Innovative Technologies
Activities of residents of the Park of Innovative Technologies are exempt from profits tax, sales tax, and VAT, providing they meet requirements of the Tax Code of Kyrgyzstan. The tax rate for employees of residents of the Park of Innovative Technologies and individual entrepreneurs is 5%.
Tax on mining
The tax on mining was added to the Kyrgyzstan Tax Code which entered into force from 22 of August 2020. Companies and individual entrepreneurs engaged in the mining activities should pay tax on mining at the rate of 15% instead of the following taxes:
- VAT on taxable supplies,
- Sales tax.
As per the Tax Code, mining is an activity that uses software and hardware to perform computing operations that ensure the functioning of the register of transaction blocks (blockchain) by entering information about operations performed between users into a distributed register (according to pre-defined rules and principles), which requires continuous power supply. Mining can be accompanied by the creation of a virtual asset that comes into the possession of the person who performs mining, as a reward for confirming transactions in the distributed registry.
The base of taxation for mining is the accrued amounts for electricity consumed during mining, including VAT and sales tax. Tax period for tax on mining is 1 calendar month.
Entities involved in the agriculture sector (i.e. producers and traders) and entities operating machine-tractor stations and trade-logistic centres for agricultural purposes can be exempt from income tax, VAT (including import VAT on certain properties), and sales tax. In addition, for such entities, property tax liabilities are reduced by 50% and computation of payroll taxes has been simplified.
Production of electricity, heat, gas, and fuel using renewable energy sources
The new producers of electric and thermal energy, gas, and renewable fuel in gaseous state, as well as liquid biofuel resulting from use of renewable energy sources, should be exempt from CIT for a five-year period upon meeting certain criteria. In addition, goods and equipment imported for the purpose of construction of renewable energy power plants and included in the list of goods established by the government of Kyrgyzstan should be exempt from VAT.