Tax incentives in the Kyrgyz Republic to attract investors

Kyrgyzstan has a list of preferential types of industrial activities subject to preferential taxation in more than 30 localities of the country.

- The list includes industrial activities in such areas as:

- light and food industries;

- electric power industry;

- processing of agricultural products;

- assembly production;

- all types of industrial production based on innovative technologies;

- any export-oriented production.

It also provides exemption from property tax, land tax, profit tax and sales tax for newly established enterprises whose activities are related to the preferential types of industrial activity. In addition, the income tax rate is set at 5%.

Since the beginning of 2022, Kyrgyzstan has a new Tax Code, which aims to optimize tax administration, ensure the stability of the tax system, further improve the digitalization of tax procedures, create a level playing field for entrepreneurship, reduce the shadow component of the economy and simplification of tax reporting.  According to the Tax Code the following rates are established:

- VAT - 0% and 12%;

- Sales tax - 1 % to 5 %;

- Profit tax - 10%.

The new Tax Code provides for:

- tax exemptions for entities in the clothing, jewelry, and aviation industries, as well as VAT exemption for supplies for the production of electric cars and electric buses;

- activities of a resident of the High Technology Park, are exempt from payment of income tax, sales tax, value added tax. These exemptions are granted to the subject of software development, as well as export of information technology;

- activities of the subject of the Free Economic Zone are exempt from all types of taxes;

- cryptocurrency mining tax provides for exemptions from income tax, value added tax and sales tax. The total number of tax benefits for a foreign investor is about 107 benefits.