Return of trade patents and tax benefits: what will change for businesses in Kyrgyzstan?

FCHAIN Kyrgyzstan informs:

New tax support measures have been introduced in Kyrgyzstan for small and medium-sized enterprises. The relevant decree was signed by President Sadyr Japarov. According to the Tax Service, the changes aim to simplify the administrative system, reduce the burden on entrepreneurs, and combat shadow economic schemes.

The key innovation is the introduction of a patent system for businesses engaged in trade. Entrepreneurs with annual revenue of up to 50 million soms can now operate under a 0.5% tax rate. Previously, the threshold was 30 million soms. This change allows businesses to earn more without moving to a higher tax bracket.

The jewelry industry also received support — the tax rate for manufacturers and sellers of jewelry has been reduced to 0.25%. For transactions with anonymous buyers, where the seller does not specify the purchaser in the documentation, a flat tax rate of 4% is introduced.

Additionally, the previous single tax rates of 0.1% and 1% have been abolished and replaced with new rates. For instance, when selling goods to taxpayers operating under a patent or a 0.5% rate, the tax will be 2% for cash payments and 1% for non-cash payments. If the buyer is not identified, a 2% rate applies.

Changes also affect transactions with foreign companies. If funds are received into an account belonging to a foreign company (or a third party on its behalf), a 0.2% tax must be paid on the income. This rule may also apply retroactively to previous periods.

Requirements for primary documentation have been simplified for small and medium-sized businesses. The absence of primary documents for goods will no longer be grounds for income tax penalties. Additionally, there will be a review of the possibility of writing off tax debts.

As for VAT, non-cash payment is now mandatory for claiming tax credits. Only payments made through a bank will be eligible for VAT deduction. According to tax authorities, this measure will increase system transparency and help combat corruption.

If an entrepreneur purchases goods from a patent taxpayer or one operating in a special regime zone, these expenses can be deducted when calculating profit tax — but only with an electronic invoice.

Finally, it has been established that when property is transferred to the state for public use (e.g., for the construction of roads or schools), the taxpayer will be exempt from tax obligations related to that transfer.