Indirect tax - Kyrgyzstan

Value Added Tax (VAT) is the main type of indirect taxation in Kyrgyzstan
It is a tax on consumption which is applied during the production and distribution process to most goods and services. It is also applied to goods, and certain services, entering the country. Although VAT is ultimately borne by the consumer by being included in the price paid, the responsibility for charging, collecting and paying it to the tax authority at each stage of the process rests with the business making the supply ie the sale.

A business registered for the tax will charge VAT (output tax) on its sales, and incur VAT (input tax) on its purchases (including any VAT paid at importation). The difference between the output tax and the deductible input tax in each accounting period will be the amount of VAT payable by the business to the tax authority. Where the input tax exceeds the output tax the amount can be submitted as prepayment for next month. (Also it may be claimed to refund, but in practice it is unlikely.)

A transaction is within the scope of Kyrgyzstan VAT if the following conditions are met:
• taxable supply (sales of goods or providing services)
• taxable import of goods

VAT for payment for the services of a foreign company. The standard rate is 12%. In addition, some goods and services are exempted from the tax and for some goods and services, the VAT is 0%.

Businesses that make exempt supplies are unable to claim all of the input tax that they incur, so the VAT paid to suppliers will be a ‘real’ cost.

Most goods imported into Kyrgyzstan from outside are subject to VAT. The tax will have to be paid by the importer at the time of importation. Where the importation is for business purposes and the importer is registered for VAT, it may be possible to reclaim the tax (subject to certain rules).

Sales tax is paid based on turnover, rates are:
• 0% – for non-cash transactions (till December 31, 2021)
• 1-3% – for cash transactions.

From January 1, 2022, VAT is a permanent tax under the common taxation system. Sales tax is also part of common system of taxation.

Only companies operating on the basis of the simplified taxation system are not VAT and sales tax payers.

For simplified taxation system there is a limit of 30,000,000 soms for 12 months.

VAT on import and VAT on services of foreign companies is compulsory for all types of taxation systems.

No.

According to the Tax Code of Kyrgyz republic a foreign company providing services in electronic form without using a domain name or IP address registered in the Kyrgyz Republic must complete online tax registration only to pay VAT.

A foreign company providing services electronically using a domain name or IP address registered in the Kyrgyz Republic must register a branch and pay all taxes.

No.

VAT returns have to be submitted every month. The deadline is 25th of subsequent month.

Sales Tax report to be submitted on monthly or quarterly basis (report period depends on turnover of the company). The deadline is 20th of subsequent month.

The tax authority may impose a default surcharge penalty if VAT returns are not submitted on time, or the related tax is not paid by the due date.

Penalty for late payment is 0.09% per day and penalty for late submission is 5000-13000 soms.

• Additional declarations have to be submitted for transactions, supply or purchase within Customs Union (Russia, Kazakhstan, Kyrgyzstan, Belorussia, Armenia).
• Report on VAT on services received from foreign companies

Yes. A range of penalties can be imposed where businesses do not comply with the VAT rules.

Rules for use and filling VAT invoices is strict.

Criminal proceedings may be brought in the case of serious matters.

No.

Tax authority assigns unique VAT invoice number to every company applied.

A VAT invoice must show:
• an invoice number which is unique and sequential
• bank account information for both supplier and customer
• the seller's name and address
• the seller's Tax registration number
• the invoice date
• the time of supply (also known as tax point) if this is different from the invoice date
• the customer's name and address
• a description sufficient to identify the goods or services supplied to the customer
• the total amount of VAT.

For each different type of item listed on the invoice, the following must be shown:
• the unit price or rate, excluding VAT
• the quantity of goods or the extent of the services
• the rate of VAT that applies to what's being sold
• code of VAT supply
• the total amount payable, excluding VAT
• the total amount of VAT.

Where a business makes retail sales and makes a sale of goods or services VAT, a single VAT invoice can be issued for one month.

At the moment, all VAT invoices are issued only electronically and are reflected online in the tax authority and with the customer.