Income Tax in Kyrgyzstan
Personal Income Tax:
Kyrgyzstan citizens who
are tax residents should be taxed on their worldwide income. Kyrgyzstan
citizens who are not residents for tax purposes and foreign citizens are taxed
on their Kyrgyzstan-source income only.
Personal income tax rates:
A single flat rate of
10% is applicable to most types of individual income.
Residency Rule:
For tax purposes,
individuals who reside in Kyrgyzstan for 183 days or more in any 12-month
period ended in tax year are treated as residents.
Foreign individuals
meeting the above criteria may claim double tax treaty (DTT) protection in
respect of their residency status, provided they are tax residents in a country
with which Kyrgyzstan has concluded a tax treaty.
Taxable Income:
Employment income:
With few exceptions,
all types of direct and indirect income are included in taxable compensation.
The salaries of
employees of the diplomatic service of the Kyrgyz Republic, civil servants, and
other workers (i.e. citizens of the Kyrgyz Republic) working in overseas
missions of the Kyrgyz Republic, as well as offices of public bodies of the
Kyrgyz Republic in foreign countries or international organisations located
abroad, are not subject to individual income tax.
Additionally, please
note that there is a certain threshold of taxable income (monthly) established
by the Tax Code. The taxable base should not be less than the minimum income
used in calculation of individual income tax. The minimum monthly salary
officially established for 2018 is KGS 1,220.
Capital gains and investment income:
Capital gains are
subject to ordinary income tax rate at 10%.
There is an exemption
available for interest income and capital gains from selling shares that are,
on the date of a given sale, in the official lists of the stock exchange in the
highest and the next to highest category of listing.
Dividends received by
an individual resident of the Kyrgyz Republic from participation in domestic
companies, as well as dividends received by a non-resident individual as part
of the profit subject to 0% profit tax, are not subject to individual income
tax.
Exempt income:
The Kyrgyz Tax Code
stipulates a list of non-taxable income, which includes, among others, social
security contributions, obligatory pension contributions, income in the form of
property received as inheritance or a gift from relatives, income from
realisation of movable and immovable property owned and used by a taxpayer for
personal needs, and other income.
Income of servicemen
and officers of the Ministry of Internal Affairs and the penal system in kind
of money allowances are exempt from PIT. Payments from funds of deputies of the
Jogorku Kenesh of Kyrgyzstan (Parliament) are also exempt from PIT.
Deductions from Income:
Personal deductions:
The following personal
deductions are allowed by the Kyrgyz Tax Code:
· Education for a taxpayer and dependants,
but not more than 10% of the aggregate taxable income.
· Interest payments under mortgage loans,
but not more than KGS 230,000 annually.
These deductions are
available only upon submission of the tax return to the tax authorities along
with the special application form and all supporting documentation.
Standard deductions:
Standard deductions
available for employees are as follows:
· 6.5 CI (Calculated Index = KGS 100).
·1 CI for each dependant.
In addition, Kyrgyzstan
legislation stipulates additional deductions for certain social categories
(e.g. war veterans, individuals with state honorary titles).
Tax Return & Period:
Taxable period:
For income tax withheld
at source (i.e. payroll income), the taxable period is a month. For income tax
not withheld at source (i.e. other than payroll income), the taxable period is
a calendar year.
Tax returns:
A tax agent is
obligated to submit the tax returns on individual income tax withheld at source
(i.e. payroll income) no later than the 20th day of the month following the
month of income payment.
Moreover, an individual
should submit a tax return on income tax not withheld at source (i.e. other
than payroll income) before 1 April of the year following the reporting year.
Payment of tax:
Tax agents withhold
income tax no later the date of income payment. Tax is due prior to the 20th
day of the month following the month of income payment.
For income not taxed at
source, income tax payment should generally be made before 1 March of the year
following the reporting year.
Corporate Income Tax:
Residence – A legal person is a resident in
Kyrgyzstan if it is established according to the laws of Kyrgyzstan or its
management bodies are located in Kyrgyzstan.
Basis – Resident companies are taxed on
worldwide income. Nonresident entities are subject to tax only on Kyrgyz-source
income and on income received by a permanent establishment in Kyrgyzstan.
Taxable income – Taxable profit is defined as
accounting profit, subject to certain adjustments in accordance with the
provisions of the Kyrgyz Tax Code. Income includes sales income (i.e. total
proceeds from the sale of goods, work, services and property rights) and
nonsales income. A list of nonsales income is provided in the Tax Code and
includes dividends, interest, royalties, leasing income, etc.
Substantiated expenses
connected with the earning of income are deductible in computing taxable
income.
Taxation of dividends – Dividends received by a resident
legal person from another domestic company are exempt from the corporate income
tax. Dividends received from a nonresident company are included in regular
income and taxed at the general tax rate.
Capital gains – Capital gains derived by a
resident are taxed as normal income at the general tax rate.
Losses – Losses incurred by a taxpayer as a
result of its economic activities may be carried forward for up to five
calendar years. The carryback of losses is not permitted.
Rate – The standard corporate income tax
rate is 10%. For leasing companies, the rate is 5% for the period from 1
January 2017 through 31 December 2021. A 0% rate applies to corporate entities
engaged in mining of gold ore, concentrate, alloy and gold refining, as well as
to certain domestic companies that use new equipment solely for production and
sell goods of their own production (provided the domestic companies comply with
certain criteria determined by the Tax Code).
Surtax – No
Alternative minimum tax – No
Foreign tax credit – A foreign tax credit is granted
for tax paid abroad on foreign income, provided there is a tax treaty with the
country in which the tax was paid. The amount of the credit will not exceed the
amount of Kyrgyz tax due on the same
income.
Participation exemption – No
Holding company regime – No
Incentives – Incentives are available for
investments in priority economic sectors relating to business activities in
special economic zones.
The profit tax for
agricultural and processing businesses that comply with certain criteria,
preschool organizations and private medicine cardio surgery businesses is 0%.
Companies operating in
a high-tech park may enjoy a profit tax exemption, VAT and sales tax
exemptions, a reduced 12% rate of social security contributions and a reduced
5% rate of personal income tax for their employees.
Other – Special taxes are levied on subsoil
users that hold licenses to engage in exploration and development of the
subsoil in Kyrgyzstan.
Withholding Tax:
Dividends – Dividends that are paid to a
nonresident entity or individual are subject to a 10% withholding tax, unless
the rate is reduced by a tax treaty.
Interest – Interest that is paid to a
nonresident entity or individual is subject to a 10% withholding tax, unless
the rate is reduced by a tax treaty.
Royalties – Royalties that are paid to a
nonresident entity or individual are subject to a 10% withholding tax, unless
the rate is reduced by a tax treaty.
Technical service fees – Technical service fees that are
paid to a nonresident entity or individual are subject to a 10% withholding
tax, unless the rate is reduced by a tax treaty.
Branch remittance tax – No
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Note:
Information
placed here in above is only for general perception. This may not reflect the
latest status on law and may have changed in recent time. Please seek our
professional opinion before applying the provision. Thanks.
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