Start your business in Kyrgyzstan on the most favorable terms!
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To start with, I can say that the economy of Kyrgyzstan is really actively developing. The government of Kyrgyzstan is constantly doing its best to create favorable conditions for business development and to attract businessmen from abroad. All these actions are implemented through adoption of laws aimed at reducing formalities and bureaucracy in conducting business.
But as the phrase has it, cognition comes through comparison. This is the case of the legal aspects of doing business in different countries. However, as an international lawyer, I can definitely say that both the government and the parliament of Kyrgyzstan do advance the reduction of formal barriers and legal delays in starting business and conducting it.
For instance, as I recall it, 20 years ago, it was much harder and more difficult to register a company.
In any case, a businessman has to be able to fill in all the documents correctly. Moreover, some documents are already received in the Kyrgyz language, and you need to navigate through documents and their contents.
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So, let’s start with the issue of a company registration.
What organizational and legal forms for conducting a business are available in Kyrgyzstan?
I will describe two basic forms that are in high demand among our local and foreign clients:
Individual entrepreneur.
Both citizens of Kyrgyzstan and foreigners who permanently or temporarily reside in Kyrgyzstan can be individual entrepreneurs.
To conduct activities as an individual entrepreneur, a person should pass state registration or obtain a license.
On the website of the Tax Service of Kyrgyzstan, one can find a list of all types of activities available for individual entrepreneurs.
Limited liability company
The second most common form of business is LLC. The founders of these entities can be citizens of Kyrgyzstan and also foreigners. I want to note that the minimum authorized capital of an LLC is only one som.
I will not dwell on less common forms such as CJSC, ALC, General Partnership and Limited Partnership.
They are also ordered by clients from lawyers, but to a much lesser extent.
I will briefly touch upon the fact that representative offices or branches of foreign companies are not recognized as legal entities in the territory of Kyrgyzstan, as well as in Russia, however, they are allowed to:
- hire both citizens of Kyrgyzstan and foreign personnel;
- open bank accounts and manage your own funds without restrictions;
- buying or renting real estate;
- enter into contracts and conduct business relations with any contractors
At the same time, representative offices of foreign companies are limited in their ability to obtain licenses. Some activities are not available to them.
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So, let's get back to the Registration of legal entities in a little more detail.
The process of registering a legal entity takes from several hours to three business days. Therefore, the amount of the state duty also differs.
Before submitting documents, it is necessary to check the uniqueness of your company's name. A huge plus is that all the names in Kyrgyzstan are unique, they cannot be confused.
You will need to provide the following list of documents to the registration authority:
Application form
Correctly filled out or there will be a refusal and non-refund of the paid state duty;
The decision of the founders to incorporate a legal entity
Properly drafted, which should contain the essential issues that the specialist of the Ministry of Justice draws attention to, so that there is no refusal;
Copies of passportsв
All participants of the future company.
The documents can be submitted as the head of the company, any of its founders, or a proxy.
When the legal entity is officially registered, you will receive a certificate of registration. Although that's not enough, you need to submit documents for registration with the tax and social fund. According to the legislation, this is up to 5 working days. In practice, it can be up to 3 working days. It is also necessary to make only one seal according to the legislation of Kyrgyzstan. With the received package of documents, we go to the bank to open a bank account. At the same time, we must make copies of all the documents received from government agencies plus a copy of the charter. Special attention should be paid to the Charter so that all the issues and wishes of the founders are reflected there. We must also remember that we need to make a signature card of persons who will be authorized to dispose of money on the account. This is done by a notary. We take the signature card itself from the bank.
The registration of individual entrepreneurs is a little easier.
Foreign citizens can obtain a certificate of registration as an individual entrepreneur exclusively at the tax authority at the place of their registration. For Kyrgyz citizens it is also possible to register at the place of operation of business.
In order to obtain a certificate, you will need to provide:
application
properly filled
copy of your passport
power of attorney
if you are applying for another person, you will also need to provide a power of attorney certified by a notary
Registration takes place within three working days for the individual entrepreneur.
As a result, you will get:
- The registration certificate;
- The certificates authorizing the issuance of your own seal and opening of a bank account.
Next, you need to get strict reporting forms and put stamps on them from the tax authority in which the registration was carried out.
Next, you need to register with the Social Fund by submitting copies of all registration documents. The process takes three working days, you can receive a notification of registration both by hand and by mail.
Registration with the Statistics Committee is faster – everything is done in 15 minutes right on the date of application. The Statistics Committee will assign you a personal supervisor, to whom you will submit all further reports.
It is also necessary to apply to the tax authority to obtain a patent for certain types of activities.
At the same time, you will not need to submit periodic accounting reports – you will only need to renew the patent in time. Printing and registration with the Statistics Committee are not necessary for conducting patent activities. The price and validity period of the patent may be different - it depends on the geographical region of registration and the type of activity you choose.
In addition, for those who did not know, we can proudly say that there are free economic zones in Kyrgyzstan: the Karakol, Leilek, Maimak, Naryn and Bishkek free economic zones. The largest one is the Bishkek FEZ.
The procedure for registration in any of the free economic zones on the territory of Kyrgyzstan goes in a simplified manner, which is established by the management of the FEZ.
Advantages of registering and doing business in the FEZ:
Various benefits in the conduct of foreign economic or financial and economic activities.
Simplified customs clearance procedure.
The possibility of free use of all infrastructure facilities located on the territory.
Let's briefly review the most interesting subject for which many foreigners set up their business here – it's low taxes compared to other countries.
Kyrgyzstan's taxation system is one of the most favorable ones in the region, with rates for both individuals and legal entities noticeably lower than in neighboring countries.
There are eight types of taxes in total:
- VAT;
- Income tax;
- Land tax;
- Excise tax;
- Sales tax;
- Property tax;
- Profit tax;
- Subsoil usage tax.
We have taxes being collected:
- under the general or simplified taxation system:
- patent-based system;
- on the basis of a tax contract (in which case a predetermined amount, rather than a percentage of profit, is payable).
Individuals have to pay the following taxes:
- Income tax is 10 percent and must be paid monthly when wages are paid.
- Land tax is paid once a year to the local tax authority, the amount of payment is calculated individually in each case.
- Property tax depends on the value and category of the property. It is paid annually to the tax authority at the place of registration
The following tax rates are provided for all legal entities:
- The income tax is 10 percent. For leasing companies, the amount is half as much, and agricultural producers are exempt altogether. The full amount must be paid once a year, but provisional figures are calculated every quarter. Small businesses pay income tax once a quarter.
- Sales tax is 1 to 5 percent. To be paid monthly or quarterly, depending on the category of the legal entity.
- Value added tax – 12 percent is paid monthly.
- Excise duty is paid once a month, its amount depends on the type of goods sold.
- Subsoil usage taxes must also be paid monthly. The rate is set individually in each case.
- Land tax is paid once a year, its amount depends on the type and size of the territory.
- Property tax depends on the category of the property.
Companies operating in free economic zones are partially exempt from paying taxes, fees and duties.
The annual payment to the subject administration is not more than 0.2 percent of the total income. Customs duties on imports or exports are also not levied, and all products manufactured within the free economic zone are exempt from quotas and licensing, but only if they are intended for export.
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