Taxation regulations for religious organisations

According to the Constitution, Kyrgyzstan is a secular state (Article 1). The state shall take care of the welfare of the people and their social protection, provide support for socially vulnerable categories of citizens, protect labour and health, develop the system of social services and medical care, provide guarantees of state pensions, benefits and other guarantees of social protection. Money is allocated from the state budget, which is replenished by taxes, fees and other compulsory deductions, in order to finance the costs. Therefore, it has been established that everyone, including religious organisations, despite religion and all religious denominations being separated from the state, shall pay taxes and fees in cases and pursuant the procedures prescribed by law (Articles 9 and 50). A unified tax system shall be in force on the territory of the Kyrgyz Republic. The right to establish taxes shall belong to the Parliament: the Jogorku Kenesh of the Kyrgyz Republic. Laws establishing new taxes and negatively affecting the situation of taxpayers shall not have retroactive force.

1. Tax legislation

The tax legislation of the Kyrgyz Republic consists of a system of regulatory legal acts that regulate tax legal relations. The main law among them is the Tax Code (TC), which establishes:

1) principles of taxation;

2) the system of taxes;

3) types of taxes levied;

4) the procedure for enacting and terminating local taxes;

5) the grounds for the emergence, change, termination and procedure for the fulfilment of tax obligations;

6) the rights and obligations of taxpayers, tax authorities and other participants in tax legal relations;

7) forms and methods of tax control;

8) liability for violation of the requirements established by the tax legislation;

9) the procedure for appealing against decisions of tax authorities and actions and/or inaction of their employees.

It is also important to know that if an international treaty of the Kyrgyz Republic establishes norms other than those provided for by the tax legislation of the Kyrgyz Republic, then the norms of such an international treaty shall apply, for example, an Agreement with other countries on the avoidance of double taxation, an Agreement within the framework of the Eurasian Economic Union (EAEU).

Acts of the tax legislation and other regulatory legal acts shall not contradict the TC. If there is a contradiction between the Code, acts of tax legislation and other regulatory legal acts, the norms established by the Tax Code shall be applied to regulate tax legal relations. Contradictions mean the presence of two or more norms that contradict each other in meaning and content.

It is very important that in the event of contradictions between the norms of the Code or the absence of norms necessary for the regulation of tax legal relations, the tax authorities and/or the courts shall make a decision in favour of the taxpayer (Article 17(3) of the TC).

2. Basic terms and definitions used in tax legal relations

The TС establishes that the institutions, terms and definitions of civil, family, customs and other branches of the legislation of the Kyrgyz Republic used in this Code shall be applied in the sense in which they are used in these branches of legislation, unless otherwise provided by the TC.

It is useful for religious organisations to know what basic terms and definitions are used in tax legal relations.

A tax is a mandatory, individually gratuitous cash payment collected from a taxpayer in accordance with the tax legislation. As of today, the following are established: income tax; profit tax; VAT; excise tax; taxes for the use of subsoil; sales tax.

There are also so-called indirect taxes: taxes on goods, works and services, established as a surcharge on the price or tariff, that are not directly related to the income or property of the taxpayer, such as VAT, excise tax and sales tax.

There are also local taxes that must be paid in the territories of the respective administrative-territorial units. Local taxes are imposed by local keneshes (councils) within their powers. Today they include property taxes.

Taxation in the Kyrgyz Republic is universal. Therefore, taxes shall not be discriminatory and shall not be applied on the basis of religious and other criteria.

Tax is collected and paid only in cash. This means that the tax cannot be paid in goods, products and other tangible and intangible equivalents.

A religious organisation, under certain conditions established by the TC, may become a participant of tax legal relations: as a taxpayer or tax representative.

The tax authorities are represented by the State Tax Service under the Ministry of Finance of the Kyrgyz Republic (STS). This institution has its own territorial subdivisions. The STS has its own website - http://www.sti.gov.kg/. It contains interesting and useful information about taxes, taxpayers and taxation in Kyrgyzstan, as well as taxpayers’ accounts.

For the purposes of the TC, an organisation means (Article 25):

1) a legal entity established in accordance with the civil legislation of the Kyrgyz Republic (hereinafter - a domestic organisation);

2) a corporation, company, firm, foundation, institution or other entity established in accordance with the laws of the country of establishment, or an international organisation (hereinafter - a foreign organisation).

Therefore, for the purposes of taxation of a domestic religious organisation, it is not enough to go through the registration with the state body in charge of religious affairs in accordance with the Law “On Freedom of Religion and Religious Organisations in the Kyrgyz Republic”. It is also necessary to go through state registration with the authorised body of justice in the manner prescribed by the Law “On State Registration of Legal Entities, Branches (Representative Offices)”, and then through tax registration in accordance with the TC.

For the purposes of the TC, a foreign religious organisation in the Kyrgyz Republic may carry out activities through a permanent establishment. The concept and requirements for permanent establishments are set out in Article 28 of the TC. A permanent establishment of a foreign religious organisation shall be subject to tax registration in accordance with the TC.

A religious organisation (domestic or foreign) or a permanent establishment of a foreign religious organisation may have a separate subdivision, which in the aggregate meets the conditions set out in Article 29 of the TC.

3. Income tax

In accordance with Article 24 of the Law “On Freedom of Religion and Religious Organisations of the Kyrgyz Republic”, the income of citizens, including clergy, working under employment contracts in religious organisations, as well as in enterprises, establishments and charitable institutions founded by them, shall be subject to income tax on a general basis.

The implementation of economic activity, including labour activity, shall constitute the object of income taxation.

For the payment of tax, it is important to know whether the subject is (Article 186 of the TС):

- a citizen of the Kyrgyz Republic;

- a resident individual who is not a citizen of the Kyrgyz Republic, but has (or does not have) a residence permit in the Kyrgyz Republic or the status of kayrylman [translator’s note: kayrylman is an ethnic Kyrgyz who has moved or wishes to move to the Kyrgyz Republic];

- a non-resident individual of the Kyrgyz Republic.

A resident individual is an individual who stays in the territory of the Kyrgyz Republic for 183 or more days during any period consisting of 12 consecutive months ending in the current tax period.

A non-resident individual is an individual who is not recognised as a resident individual in accordance with the TC.

The source of income is also important: either in the Kyrgyz Republic or from a source outside the Kyrgyz Republic.

The tax base for income tax is the income calculated as the difference between the total annual income received by a taxpayer for the tax period, reduced by the amount of non-taxable income, and the deductions provided for by the TC.

The tax period for income tax is a calendar year.

The total annual income includes all types of income received by a taxpayer, both in cash and in kind, in the form of work or services.

Some categories of taxpayers have income tax benefits in the form of exemption from income tax (Article 191 of the TC). Thus, wages, bonuses, compensations and other compensatory and incentive payments to employees of religious organisations received as a result of their labour activity shall not be subject to income tax (part 4, para. 10, Article 191 of the TC).

Income tax exemption does not apply to income received from the sale of movable and/or immovable property under the following conditions:

1) a motor vehicle, which has been owned on the right of ownership for more than one year from the date of acquisition;

2) real estate (housing), which has been owned by the taxpayer on the right of ownership for more than 2 consecutive years from the date of acquisition of this real estate;

3) agricultural produce received by the taxpayer from his/her household plot;

4) movable property acquired and used for own needs.

Unless otherwise provided by the TC, a taxpayer shall be entitled to the following deductions: standard deduction; social deduction; property deduction. The taxpayer shall be entitled to deductions in the tax period to which such deductions pertain (Article 193 of the TC).

The income tax rate is set at 10 percent, unless otherwise provided by Article 197 of the TC.

A taxpayer shall make a final calculation and pay income tax before the date of submission of a single tax return. Income tax is paid at the place of registration and/or accounting registration of the taxpayer.

Unless otherwise provided by the TC, when paying income to an individual, the calculation, deduction and payment of the amount of income tax to the budget shall be made by a tax agent who meets the requirements for the fulfilment of the tax obligation: for an employer’s agent, for an agent when paying income to an individual who is not in an employment relationship with the agent.

Income tax withheld by a tax agent shall be paid to the budget no later than the 20th day of the month following the month in which the income was paid (Article 202(1) of the TC).

The tax agent shall submit income tax reports to the tax authority at the place of its payment no later than the 20th day of the month following the reporting month (Article 203 of the TC).

The amount of tax paid by a taxpayer in a foreign state shall be offset when calculating the tax liability for income tax in the Kyrgyz Republic in the presence of an Agreement on the avoidance of double taxation concluded between the Kyrgyz Republic and a foreign state that has entered into force in accordance with the procedure established by law, if the amount of such income is subject to taxation in a foreign state in accordance with the provisions of this Agreement (Article 205 of the TC).

The procedure for offsetting amounts of income tax paid in a foreign state is established by the Cabinet of Ministers.

4. Income tax

In accordance with Article 17 of the Law “On Freedom of Religion and Religious Organisations of the Kyrgyz Republic”, religious organisations have the right to establish economic entities, as well as charitable institutions (shelters, boarding schools, hospitals) and other enterprises.

Religious organisations have the right to engage in economic activities, including production activities, in order to achieve their statutory goals.

Profits from production activities and other income of religious organisations shall be taxed in accordance with the TC.

According to the TC, a taxpayer of income tax is:

1) a domestic organisation;

2) a foreign organisation operating through a permanent establishment in the Kyrgyz Republic;

3) a foreign organisation operation without a permanent establishment in the Kyrgyz Republic and receives income from a source in the Kyrgyz Republic;

4) an individual entrepreneur.

Income tax obligations of a foreign organisation that is not associated with a permanent establishment in the Kyrgyz Republic and which receives income from a source in the Kyrgyz Republic shall be performed by a tax agent.

The object of taxation of income tax is the implementation of economic activity, which has resulted in receiving income from a source in the Kyrgyz Republic and/or from a source outside the Kyrgyz Republic.

The tax base for income tax is the positive difference between a taxpayer’s total annual income, reduced by the amount of non-taxable income and expenses deductible in accordance with the TC, calculated for the tax period.

The tax base for a foreign organisation that is not associated with a permanent establishment in the Kyrgyz Republic and which receives income from a source in the Kyrgyz Republic is income without deductions.

The total annual income includes all types of income determined in accordance with the rules established by the legislation of the Kyrgyz Republic on accounting, including various proceeds and incomes.

The tax period for income tax is a calendar year.

According to Article 213 of the TC, the following are not subject to income tax: income received by religious organisations: membership and entry fees; humanitarian aid and grants, as well as voluntary donations and the value of donated assets, provided they are used for statutory purposes; income from the provision of religious rites, rituals, ceremonies, services for organising and conducting pilgrimages, as well as voluntary donations.

The Tax Code establishes a list of expenses deductible from the total annual income: documented expenses related to the receipt of income. For example, production expenses within the technological norms of losses of raw materials and materials in the process of production of goods, expenses related to business trips, representation expenses, expenses for employee training (training, professional development and retraining of personnel), interest expenses if the amount of the debt was used for economic activity, expenses for the repair of fixed assets, the amount of insurance premiums for state social insurance.

Depreciation charges on depreciable fixed assets are also subject to deduction. The TC determines the property that is subject to depreciation. Depreciation is the transfer in parts of the cost of fixed assets as they are physically or morally depreciated to the cost of products, works or services. For this, the following conditions must be met:

- a depreciable fixed asset, including an intangible asset, must be in ownership, operational management, economic management of the taxpayer, unless otherwise provided by the TC;

- shall be put into operation;

- shall be used to generate income, whose value is 100 or more calculation indices (Article 225 of the TC).

Fixed assets subject to depreciation are classified into 6 groups with established depreciation rates. For example, group 1 includes cars, computers, and equipment connected to computers, copiers, telephones, tools and equipment with a depreciation rate of 30 percent. Group 2: vehicles, except for cars, machinery and equipment for all sectors of the economy, furniture, intangible assets with a depreciation rate of 25 percent. Buildings, structures, premises belong to the 5th group with a depreciation rate of 10 percent.

Land and other objects of nature use are not subject to depreciation, such as water, subsoil and other natural resources, as well as inventories, objects of capital construction in progress, securities, financial instruments, uninstalled equipment, fixed assets and intangible assets that are not used by the taxpayer in the production and/or sale of goods, performance of work and provision of services, and property whose value is fully transferred in the current tax year to the cost of finished goods, work performed and services rendered.

Income tax benefits have been established. For example, the following income is exempt from taxation: charitable organisations; preschool educational organisations (kindergartens established on the basis of private ownership); general educational organisations established on the basis of private ownership. However, exemption from payment of income tax does not relieve the taxpayer from the obligation to submit an income tax return (Article 239 of the TC).

The income tax rate is set at 10 percent.

Article 242 of the TC defines the procedure for determining, term and place of payment of income tax. Thus, a taxpayer shall make the final calculation and pay the tax before the deadline for submission of a single tax return. Income tax is paid at the place of the taxpayer’s current tax registration.

Article 243 of the TC establishes the procedure for determining, term, place of payment and submission of tax reports on a preliminary amount of income tax. Thus, a taxpayer shall, starting from the second quarter, submit tax reports on a quarterly basis and pay a preliminary amount of income tax to the budget no later than the 20th day of the second month following the reporting period, at the place of the taxpayer's current tax registration.

The reporting period for a preliminary amount of income tax is the first quarter, the first half of the year, the first 9 months of the current tax period.

5. Value added tax

Value added tax (VAT) is an indirect tax, a form of withdrawal to the state budget of a part of the added value of goods, works or services that is created in the process of production of goods, works and services.

The VAT rate is set at 12 percent of taxable deliveries and taxable imports, or at 0 percent for deliveries referred to in Articles 302-306 of the TC and in Article 430 (2) of the TC (Article 254).

The taxpayer is subject to VAT registration. The requirements and procedure for registration are determined by the TC. For example, an entity carrying out entrepreneurial activities and paying taxes under the simplified taxation system based on a single tax, whose revenue for the last 12 consecutive months, or for a period of less than 12 consecutive calendar months, exceeded the amount of 30,000,000 KGS, shall register as a VAT taxpayer by submitting an application within one month after the period in which its revenue exceeded the amount of 30,000,000 KGS.

VAT registration can be cancelled. For example, if the taxpayer's revenue amounts to less than 30,000,000 KGS for the last 12 consecutive months. Such a taxpayer can switch to a simplified taxation system based on a single tax, and the VAT registration can be cancelled accordingly.

The object of VAT taxation is: 1) a taxable delivery; 2) taxable imports.

The TC defines what is recognised as a delivery of goods, works and services (Article 258). For example, the transfer of ownership of goods to another person, including the transfer of goods by an employer to an employee as wages or other payments provided for by the Labour Code, the transfer of pledged property to pay off a debt by the pledger under the debt obligation.

The TC also defines what is not a delivery of goods. For example, if the ownership of goods is not transferred to another entity.

For VAT purposes, there are requirements for the import of goods carried out by an agent on his/her own behalf or on behalf of the principal.

The date of occurrence of the tax obligation is the date of delivery. For example, the date of delivery for goods is the date when ownership of the goods is transferred to the buyer. The date of delivery for works performed or services rendered is the date when all work is completed or services are rendered. Similarly, for completed construction and installation works, the date of occurrence of the tax obligation is the date when the work is completed and paid for (Article 261).

The place of delivery of goods is important for VAT purposes, for example, the place of delivery of goods shall be the place where the supplier handed over the goods or the location of the goods at the time of commencement of transportation. At the same manner, the place of delivery of works, services shall be the territory of the relevant state, for example, if the works, services are directly related to real estate located within the territory of this state.

What constitutes an exempt delivery and a delivery with a zero VAT rate? For example, a VAT-exempt delivery is the provision of services for religious rites, rituals, ceremonies, as well as services for organising and conducting pilgrimages.

Deliveries made by charitable organisations for charitable purposes in accordance with the legislation on patronage and charitable activities shall refer to VAT-exempt deliveries.

If a religious organisation has a kindergarten or school, then the delivery of services by private kindergartens or schools shall refer to a VAT-exempt delivery.

Goods imported into the territory of the Kyrgyz Republic, such as specialised goods for persons with disabilities; teaching aids and school supplies, scientific publications shall be exempt from VAT.

If a religious organisation is engaged in the export of goods, except for the export of metal-containing ores, concentrates, alloys and refined metals, then such a delivery shall be at a zero rate of VAT (Article 303).

The VAT tax base for a taxable delivery is the taxable value of the delivery, determined in accordance with Articles 308, 310 and 311 of the TC. For example, the taxable value of a delivery is the total amount to be paid or payable in respect of such delivery, excluding VAT and sales tax.

When goods are delivered free of charge, the taxable value of the delivery shall be the book value of the goods.

The taxable value of goods imported from states that are not members of the EAEU is the sum of their customs value, customs duties and taxes payable upon import of these goods, excluding VAT.

The taxable value of the import of goods from the EAEU member states. Unless otherwise provided by the TC, the taxable value of the import of goods is determined on the basis of the value of the purchased goods, stipulated by the terms of the contract.

The tax period for calculating VAT for taxable deliveries is one calendar month. In certain cases, for deliveries of a foreign organisation - one calendar quarter.

The TC defines the procedure for calculating VAT and its offsetting: the taxpayer shall be granted the right to offset the amount of VAT paid or payable for the acquired material resources used to create taxable deliveries. The right to offset arises for the taxpayer under the conditions set out in Article 315 of the TC.

Tax reporting for VAT shall be submitted to the place of current tax registration no later than the established deadlines. When importing goods into the territory of the Kyrgyz Republic from the territories of the EAEU member states, the taxpayer shall submit tax reports no later than the 20th day of the month following the month in which the goods were imported.

VAT shall be paid at the place of the taxpayer’s current tax registration no later than the 25th day of the month following the reporting tax period. VAT on imported goods shall be paid no later than the 20th day of the month following the month in which the goods were imported.

6. Excise tax

Excise tax is an indirect tax, the collection of which is not related to the cost of goods, production costs, but depends on the purposes of taxation and the needs of the budget.

A taxpayer of excise tax is an entity that produces, including on a give-and-take basis, excisable goods in the territory of the Kyrgyz Republic and/or imports excisable goods into the territory of the Kyrgyz Republic, unless otherwise provided by the TC.

The object of excise taxation is the production in the Kyrgyz Republic and/or import to the Kyrgyz Republic of excisable goods provided for by Article 334 (1) of the present Code.

Based on the list of excisable goods, in practice it is unlikely that religious organisations will act as a taxpayer of excise tax, therefore, in this section we will limit ourselves to general information about excise tax.

7. Sales tax

A sales tax is an indirect tax (consumption tax) levied on buyers at the time of purchase of goods or services.

Sale of goods, performance of works and provision of services for religious rites, rituals, ceremonies, as well as services for the organisation and conduct of pilgrimages shall be exempt from sales tax (Article 364). Sale of goods, performance of work and provision of services by private kindergartens shall be also exempt from the tax.

Sale of goods, performance of works and provision of services by a religious organisation shall be exempt from sales tax, provided that the payment does not exceed the costs of the sale of these goods, the performance of these works and the provision of these services: for social security and protection of children or low-income elderly citizens; in the field of education, medicine, science, culture and sports.

As mentioned above, sales tax is imposed on the sale of goods, the performance of works and the provision of services, with certain exceptions. For example, the following shall not be subject to sales tax: transfer of property from the owner; export of goods, works, services or sale of goods, works, services outside the territory of the Kyrgyz Republic.

Unless otherwise provided by the TC, the tax base is the proceeds from the sale of goods, works, services, excluding VAT and sales tax. For example, when property is rented out, the tax base is the rent without VAT and sales tax (Article 366).

The sales tax rate shall be established:

1) when selling goods, works, services subject to VAT: in the amount of 1 percent - for trading activities and the production sector; in the amount of 2 percent - for other types of activities;

2) when selling goods, works, services exempt from VAT: in the amount of 2 percent - for trading activities and the production sector; in the amount of 3 percent - for other types of activities.

The tax period for sales tax is a calendar month.

The calculation of the amount of sales tax is made by the taxpayer on his/her own in accordance with the procedure established by Article 43 (1) of the TC.

Sales tax is paid by the taxpayer at the place of accounting registration on a monthly basis, no later than the 20th day of the month following the reporting month.

Tax reports shall be submitted at the place of accounting registration on a monthly basis, no later than the 20th day of the month following the reporting month.

In the absence of accounting registration, sales tax shall be paid at the place of current tax registration.

8. Property tax

Property tax is a tax imposed on the property of a religious organisation.

The lands of liturgical objects of religious organisations are exempt from paying property tax. Liturgical objects are objects of immovable property of religious institutions used directly for the performance of rites, prayers for the purpose of joint confession and dissemination of faith. It can also be noted that the land of cemeteries is exempt from taxation (Articles 410 and 411).

Privileges have been established for property tax on a building, premises, depending on the area of a residential house or apartment and the population in settlements. For example, a residential house is not subject to taxation if the area of the house in the city of Bishkek does not exceed 150 sq.m.

Buildings and premises of non-profit organisations operating in the field of science, education, healthcare, culture, sports, social security of disabled citizens, low-income and underprivileged families, as well as charitable organisations are not subject to taxation, regardless of the area and the population in settlements.

If a religious organisation has a vehicle driven by an electric motor, then this vehicle is not subject to taxation.

Property tax payers are:

1) an organisation, an individual entrepreneur or an individual with respect to a property registered or used in the territory of the Kyrgyz Republic:

  1. a) owned by it/him/her under the right of ownership, unless otherwise provided by this article;
  2. b) a land plot in use under the right of temporary land use;
  3. c) acquired under a financial lease or mortgage lending agreement;
  4. d) a facility in use;

The object of taxation of property tax are rights. For example, the right of ownership of property; the right to use state and/or municipal property arising from the lease agreement. In certain cases, provided for by the TC, the object of taxation is the actual possession and use of the property. The List of property that is not subject to taxation is approved by the Cabinet of Ministers.

The tax base for property tax is:

1) for a building, premises, structure and land plot - the area of the building, premises, structure and land plot in square metres;

2) for a vehicle, including aircraft and watercraft:

  1. a) powered by an internal combustion engine - the working volume of the engine in cubic centimetres or the book value in KGS;
  2. b) having no internal combustion engine, - book value in KGS;
  3. c) having no internal combustion engine and book value - the value in KGS, determined in accordance with the procedure established by the Cabinet of Ministers.

As a general rule, the tax base for property tax is determined on the basis of a document of title to the property (Article 376).

In the absence of registration of rights to property, a document of title to the property, the impossibility to identify the owner of the property, the basis for recognising the taxpayer of property tax is the actual possession and/or use of such property.

When providing for use (lease) objects of property owned or used by entities exempt from taxation, the lessor shall be the taxpayer of the property tax.

The tax period for property tax is a calendar year.

The property tax rate is set as follows:

1) for residential buildings and premises - 0.35 percent;

2) for non-residential buildings, structures and premises - 0.8 percent;

3) for land plots, except for agricultural land - 1 percent;

4) for agricultural land - 0.01 percent;

5) for vehicles, including aircraft and watercraft:

  1. a) powered by an internal combustion engine - 1 percent;
  2. b) having no internal combustion engine - 0.5 percent.

Property tax is calculated according to the formula: T = TB x TV x R, where:

T - the amount of property tax; TB - tax base; TV - the tax value of a unit of property; R - the tax rate.

As a general rule, the calculation of property tax shall be carried out by the taxpayer on its/his/her own in accordance with the procedure established by the TC. The obligation to calculate the amount of tax on individuals’ land adjacent to a house, household plot and garden plot, except for tax on land, used for entrepreneurial activities, shall be assigned to the tax authority at the location of the land plot.

When calculating property tax, the base tax value per square metre of the area of a building, structure or premises is applied depending on the material of the walls (brick, wood, clay, etc.) and the year the property was put into operation.

Furthermore, when calculating property tax, the following coefficients are applied:

- regional coefficient Cr: the ratio of the average tax value of a building, structure and premises in the administrative districts of the country to the average tax value of a building, structure and premises in the city of Bishkek;

- zonal coefficient Cz: change in the tax value of a building, structure and premises depending on its location in a populated area - administrative district as compared to the average value of the tax value of the building, structure and premises in a populated area, equal to 1.0. The zonal coefficient Cz for buildings, structures and premises is set equal to 1.0, except for the cities of Bishkek, Osh and Jalal-Abad;

- coefficient of functional purpose Cp: characterises the change in the tax value of a non-residential building, structure or premises, depending on its functional purpose, which is determined based on the purpose of the property specified in the title document.

Thus, the calculation of the tax value is made according to the formula:

- one square metre of a residential building or premises TV = BTV x Cr x Cz, where: TV - the tax value of one square metre of a residential building or premises; BTV - the base tax value of one square metre of a residential building or premises; Cr - regional coefficient; Cz - zonal coefficient;

- one square metre of a non-residential building, structure or premises: TV = BTV x Cr x Cz x Cp, where: TV - the tax value of one square metre of a building, structure or premises; BTV - the base tax value of one square metre of a non-residential building, structure or premises; Cr - regional coefficient; Cz - zonal coefficient; Cp - coefficient of functional purpose.

Property tax is paid at the location of: the building, premises, structure and land; registration or temporary registration of the vehicle.

When registering a property within the city of Bishkek, property tax may be paid at the place of the taxpayer's current tax registration.

A taxpayer shall submit an information calculation within the deadlines established for the submission of a single tax return, with the exception of property tax on a land adjacent to a house, household plot and garden plot. The form of the information calculation and the procedure for its completion and submission are approved by the authorised tax authority.

Property tax on a residential building or premises shall be paid no later than September 1 of the current tax period. Property tax on a vehicle shall be paid no later than September 1 of the current year.

Property tax on a non-residential building, structure and premises shall be paid quarterly no later than the 20th day of the third month of the current quarter, in equal instalments during the current tax period.

Property tax on a vehicle shall be paid no later than September 1 of the current year.

9. Control over the implementation of the tax legislation

The tax authorities and their officials shall exercise tax control over the implementation of the tax legislation of the Kyrgyz Republic.

In accordance with Article 17 and Article 26 of the Law “On Freedom of Religion and Religious Organisations of the Kyrgyz Republic”, control over the financial and economic activities of religious organisations shall be carried out in accordance with the legislation of the Kyrgyz Republic.

A religious organisation shall keep accounting records and statistical reporting in accordance with the procedure established by the legislation of the Kyrgyz Republic.

A religious organisation shall provide information about its activities to the state body in charge of official statistics and to tax authorities in accordance with the legislation of the Kyrgyz Republic and the Charter (regulations) of a religious organisation.

The size and structure of the income of a religious organisation, as well as information on the size and composition of assets of a religious organisation, its expenses, the number and composition of employees, their remuneration, the use of unpaid labour of citizens in the activities of a religious organisation cannot be the subject of a commercial secret.

Tax control is the control of tax authorities over the implementation of the tax legislation of the Kyrgyz Republic. It shall be carried out in the following forms: 1) tax registration and accounting registration of a taxpayer; 2) accounting of tax revenues to the budget; 3) tax audit; 4) raid tax control; 5) establishment of a tax post; 6) control over compliance by the taxpayer with the procedure for applying cash registers.

The tax authorities shall also carry out pre-trial proceedings involving the functions of an inquiry body in accordance with the criminal procedural legislation and the legislation on operational-search activities on the administration and enforcement of tax legislation.

10. Liability for tax offenses

The TC establishes liability for tax offenses. Thus, Article 162 defines that if a taxpayer conducts activities without tax and/or accounting registration with a tax authority, a tax sanction shall be applied in a one-time amount of taxes accrued and/or subject to accrual for the entire period of such activity, but not less than 50 calculation indices.

An understatement of the amount of tax, failure to submit tax returns and illegal offsetting of VAT, entails liability under Article 163 of the TC. If, based on the results of an on-site audit, the tax authority establishes that the amount of tax indicated in the tax reporting is understated in comparison with the amount of tax that should have been indicated in the tax reporting:

1) if the tax amount is understated by up to 10 percent of the tax amount that should have been indicated in the tax reporting of the corresponding tax period, a tax sanction shall not be applied to the taxpayer;

2) if the tax amount is understated by between 10 to 50 percent of the tax amount that should have been indicated in the tax reporting of the corresponding tax period, a tax sanction of 50 percent of the understated tax amount shall be applied to the taxpayer;

3) if the tax amount is understated by more than 50 percent of the tax amount that should have been indicated in the tax reporting of the corresponding tax period, a tax sanction of 100 percent of the understated tax amount shall be applied to the taxpayer.

If, based on the results of an on-site audit, it is established that the taxpayer failed to submit tax reporting for a particular tax period, the entire amount of the tax liability that was subject to disclosure in such tax reports shall be recovered to the budget and a tax sanction of 100 percent of the revealed tax liability shall be applied to the taxpayer.

If, based on the results of an on-site audit, it is established that the taxpayer has exercised the right to offset the amount of VAT paid or payable for the acquired material resources using invalid invoices, a tax sanction of 100 percent of the offset VAT shall be applied to the taxpayer.

Article 164 of the TC establishes the liability of a tax agent for failure to fulfil his/her obligations to pay taxes. Thus, in case of non-payment or incomplete payment of the amount of tax withheld and payable, a tax sanction of 10 percent of the unpaid amount of tax payable and/or additional payment for each full or incomplete month from the date set for its payment, but not more than 50 percent of the specified amount, shall be applied to the tax agent.

Based on the submitted updated report, the tax sanction shall be applied only to the amount of the unpaid tax liability arising from the submitted report.

The liability of a tax authority official is provided for in Article 165. Thus, an official who has committed unlawful actions and/or inaction shall not be entitled to hold any position in the tax authorities after his/her guilt has been established in court.

Whereas losses caused to the taxpayer as a result of:

- illegal actions and/or inaction of the tax authority;

- illegal actions and/or inaction of its officials who violated the taxpayer’s rights;

- improper implementation by the tax authority or its officials of the obligations provided for by the TC with respect to the taxpayer,

shall be subject to reimbursement by these officials and tax authorities.

11. Criminal liability for violations of the tax legislation

A taxpayer bears criminal liability for violating the provisions of the tax legislation.

According to Article 242 of the Criminal Code (CC), evasion of tax and (or) other obligatory payments to the budget by failure to submit an income declaration in cases where the submission of a declaration is mandatory, or by including in the declaration or other documents related to the calculation or payment of taxes and (or) other obligatory payments to the budget, deliberately distorted data on income, expenses or property subject to taxation, if this act is confirmed by a decision of the tax authorities that has entered into force and entailed non-payment of tax and (or) other obligatory payments to the budget on a large scale, - shall be punishable by deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years, or correctional labour for a term of two months to one year, or a fine of 500 to 1000 calculation indices, or imprisonment for up to two years.

The same act, committed on a particularly large scale, shall be punishable by a fine of 1,000 to 2,000 calculation indices, or imprisonment for a term of two to five years, with or without deprivation of the right to hold certain positions or engage in certain activities for up to three years.

Evasion of tax and (or) other obligatory payments to the budget by an organisation by failure to submit a declaration where the submission of a declaration is mandatory, or by stating deliberately distorted data on income and (or) expenses in the declaration, or by concealing other objects of taxation and (or) other obligatory payments, if this act is confirmed by a decision of the tax authorities or judicial acts that have entered into force and entailed non-payment of tax and (or) other obligatory payments to the budget on a large scale, - shall be punishable by deprivation of the right to hold certain positions or engage in certain activities for a term of up to three years or correctional labour for a term of two months to one year, or a fine of 500 to 1000 calculation indices, or imprisonment for up to two years.

  1. The same act committed: 1) on a particularly large scale; 2) by using an invoice without the actual performance of work, provision of services or shipment of goods; 3) by a group of persons; 4) by a group of persons by prior conspiracy, shall be punishable by a fine of 1000 to 2000 calculation indices, or imprisonment for a term of two to five years, with or without deprivation of the right to hold certain positions or engage in certain activities for up to two years (Article 243 of the CC).

In Articles 242-243 of the CC, evasion is confirmed by the materials of a tax audit conducted by the tax authorities, based on which the tax authorities have taken a decision on additional assessment of taxes and (or) other obligatory payments, which meets the following criteria:

1) if the relevant decision has entered into force and has not been appealed by the taxpayer to the authorised tax authority within the period for filing a complaint by the taxpayer, established by tax legislation;

2) if there is an enforceable relevant decision of the authorised tax authority with respect to the taxpayer's complaint, confirming that the amount of uncalculated tax exceeds the threshold required for criminal liability, and the taxpayer has not brought the complaint to court within 30 calendar days from the day following the day the decision of the authorised tax authority was delivered to the taxpayer;

3) if there is an enforceable court decision, confirming that the amount of uncalculated tax exceeds the threshold required for criminal liability.

12. Liability for offenses under the Code of Offenses

According to Article 308 of the Code of Offenses of the Kyrgyz Republic (Code), the absence or distortion of accounting records or failure to submit accounting and tax reports, balance sheets, calculations and other documents related to the calculation and payment of taxes to the budget within the established deadlines – shall be punishable by a fine of 30 calculation indices for individuals and 130 calculation indices for legal entities.

Tax evasion in the form of the concealment (understatement) of profits, income or other objects of taxation - shall be punishable by a fine of 75 calculation indices for individuals and 230 calculation indices for legal entities.

Violation of the deadlines for submitting tax reports with zero values - shall be punishable by a warning or a fine of 10 calculation indices for individuals and 50 calculation indices for legal entities.

Article 309 of the Code establishes liability for conducting economic activity without registration with the tax authorities, which shall be punishable by a fine of 10 calculation indices for individuals and 50 calculation indices for legal entities.

Pursuant to Article 318 of the Code, implementation of cash settlements in violation of the established procedure for cash settlements – shall be punishable by a fine of 30 calculation indices for individuals and 130 calculation indices for legal entities.

There are a number of offences relating to the use of cash registers:

- implementation of cash settlements with the population without the use of cash registers – shall be punishable by a fine of 75 calculation indices for individuals and 230 calculation indices for legal entities;

- the same act referred to above, committed repeatedly after the implementation of sanctions, - shall be punishable by a fine of 200 calculation indices for individuals and 650 calculation indices for legal entities;

- failure to print out and issue a cash register receipt to the buyer (client) or issuance of a cash register receipt indicating the amount less than paid – shall be punishable by a fine of 30 calculation indices for individuals and 130 calculation indices for legal entities (Article 318 of the Code);

- engaging in activities in violation of the requirements for the use of cash registers, imposed by the tax legislation, as well as violation of the standard rules for the operation of cash registers – shall be punishable by a fine of 30 calculation indices for individuals and 130 calculation indices for legal entities (Article 319 of the Code);

- preventing employees of tax authorities from accessing cash registers and software tools for accounting of goods, payment for works and services – shall be punishable by a fine of 75 calculation indices for individuals and 230 calculation indices for legal entities (Article 320 of the Code);

- the use of a faulty cash register - shall be punishable by a fine of 30 calculation indices for individuals and 130 calculation indices for legal entities (Article 321 of the Code).

Failure to submit a single tax return, or submission of a single tax return with inaccurate, incomplete or distorted information, or failure to pay tax within the established deadlines - shall be punishable by a fine of 10 calculation indices for individuals and 50 calculation indices for legal entities (Article 322 of the Code).

The State Tax Service is the body that examines cases of offenses and imposes sanctions provided for in the above articles.