President of the Kyrgyz Republic Sadyr Japarov has signed the Law of the Kyrgyz Republic "On Amendments to Certain Legislative Acts of the Kyrgyz Republic in the Field of Taxation and Social Insurance."
The purpose of the Law is to further liberalize the economy to attract large foreign capital and international financial institutions, as well as to create conditions for local entrepreneurs to enter foreign markets.
The business community has long participated in working groups and proposed its suggestions for improving tax and social policies. As a result of their active participation, important aspects for improving the business climate in the country were taken into account.
The Law provides for a reduction in social insurance contribution rates from 27.25 percent to 12.25 percent, where:
– 2.25% will be paid by the employer;
– 10% will be paid by the employee.
However, according to the Law, the reduction in social insurance contribution rates will not apply to the following categories:
– organizations funded from the state budget;
– mining enterprises engaged in the development of subsoil areas of national significance and holding a license for the use of subsoil of national significance;
– organizations engaged in the supply of electricity, heat energy, and gas;
– business entities engaged in the production and/or import of alcoholic beverages, tobacco products, and lubricants, except for entities engaged in the production and processing of petroleum products that have a license to conduct this activity in accordance with the legislation of the Kyrgyz Republic in the field of the licensing and permitting system (processing of oil and natural gas, except for the industrial production of bioethanol from plant raw materials and its sale);
– entities engaged in cellular communication services;
– internet service providers;
– commercial banks, specialized financial and credit institutions, or credit organizations.
The Law includes measures to prevent revenue losses from social insurance contributions. One such measure is the requirement for employers to maintain a Tax Agent Register with up-to-date information about their employees. This register is used when submitting tax reports on income tax.
