Bussines relocation to Kyrgyzstan

1) Can Russian citizens register a business in Kyrgyzstan?

Russian citizens can freely establish business in Kyrgyzstan both independently and in cooperation with other citizens and organizations of the Kyrgyz Republic and other foreign countries. Restrictions are only some of the activities listed below.

Organizational and legal forms of doing business in Kyrgyzstan are almost similar to Russian ones and therefore are quite familiar to entrepreneurs from Russia. As a rule, this is doing business as an Individual Entrepreneur, or in the form of a commercial legal entity: LLC (Limited Liability Company), JSC (Joint Stock Company, closed or open), as well as doing business through the opening of a branch or representative office of a Russian company in Kyrgyzstan.

2) What documents are required for Russian citizens to register a business in Kyrgyzstan?

To register a business in Kyrgyzstan, Russian citizens, in fact, will only need a passport. Registration or registration in Kyrgyzstan is not required.

When registering a branch or representative office of a Russian company, documents for the relevant organization (an extract from the Unified State Register of Legal Entities and copies of constituent documents) will be additionally required.

3) Is it possible to remotely register a business in Kyrgyzstan?

Yes, Russian citizens can issue a power of attorney at any notary in the Russian Federation, on the basis of which the lawyers of the Law Firm DE URE consult will be able to make a comprehensive and remote registration of business. Legal services for remote business registration in Kyrgyzstan for Russian citizens include:

• advising on registration procedures and the choice of organizational and legal form of business;
• development of all constituent documents;
• registration with the justice authorities;
• registration with the tax authorities;
• registration with the bodies of the social fund;
• production of the main seal on automatic tooling;
• opening a multi-currency bank account (if necessary);
• registration of the constituent issue of shares (for joint-stock companies).

All these services can be provided remotely, without the arrival of the founder and head of business in Kyrgyzstan.

4) What taxes are paid when doing business in Kyrgyzstan?

Taxation of business is carried out depending on the chosen tax regime. Thus, the following main tax regimes operate in Kyrgyzstan:

1) General tax regime

2) Special tax regimes (patent-based tax; simplified taxation system based on a single tax; tax regime in the High-Tech Park , etc.).

Under the general tax regime, sales tax is paid from 0% to 5% (depending on the type of activity, the availability of cash or non-cash payments, VAT or VAT exemption), income tax 10%, VAT 12%.

When carrying out activities on the basis of a patent, the value of the patent is determined by the relevant provision. The taxpayer of the tax on the basis of a patent can  only be an individual who carries out individual labor activity or individual entrepreneurial activity according to the list approved by the Cabinet of Ministers or an organization carrying out the activities of an exchange bureau.

When carrying out activities on the basis of a single tax , a single tax is paid:

1) An organization whose revenue does not exceed  KGS 30,000,000 for the last 12 months pays a single tax at rates in the following amount:

• for the processing of agricultural products, for the production sector; for trading - 2% of revenue in non-cash form (4% of revenue in cash),
• for other types of activities - 4% of revenue in non-cash form (6% of revenue in cash);
• the subject of garment and / or textile production pays a tax of 0.25 % during the period up to January 1, 2027;
• a taxpayer providing catering services, saunas, billiards and baths, with the exception of municipal baths, pays a tax of 8%.

2) An individual entrepreneur engaged in the sale of goods, works, services to the population, the amount of revenue of which does not exceed 8000000 soms for the last 12 months, pays a single tax at rates in the following amount:

• in 2022 – 0%;
• in 2023 – 1%;
• in 2024 – 2%;
• from 2025 at the rates established for organizations in the general order.

When carrying out activities on the basis of the tax regime in the High-Tech Park, sales tax, income tax and VAT are NOT paid. This regime is available only for residents of the High-Tech Park (HTP).Such an organization pays income tax (analogue of personal income tax in the Russian Federation) at a rate of 5% and insurance premiums  (analogue of the pension fund in the Russian Federation) at a rate of 27.25% withheld /paid from the salaries of employees. The status of hTP resident can be obtained by an organization whose at least 90% of  income consists of income received as a result of the implementation of activities in the field of software development, export of information technologies and software, creation and provision of services of interactive service centers. At the same time, n e less than 80% of goods and services must be exported and/or at least 80% of the income of the HTP resident must be earned as a result of the export of goods and services.

Note:  income tax (analogue of personal income tax in the Russian Federation) - 10% is also paid tothe ratio of taxes paid in accordance with the established tax regime, state social insurance (analogue of payments to the pension fund in the Russian Federation) - 10% at the expense of the employee and 17.25% at the expense of the employer (until November 2022 in respect of foreign employees, with the exception of citizens of the EAEU member countries - 3%).

When paying dividends to the founder, the tax on income of non-residents in the amount of 10% is additionally withheld and paid. At the same time, the payment of dividends to residents of Kyrgyzstan is not taxed.

5)  Is it possible to appoint a Russian citizen to the position of head of a company in Kyrgyzstan?

Yes, the employment of Russian citizens is carried out in the same manner and conditions as the employment of citizens of Kyrgyzstan. Obtaining permits for citizens of the Russian Federation is not required.

At the same time, the employer only needs to obtain a personal identification number (PIN) for an employee-citizen of the Russian Federation. Receipt of PIN is free of charge in the PSC.

Deductions from the salary of an employee-citizen of the Russian Federation are carried out on general grounds.

6) Is a Russian citizen arriving in Kyrgyzstan obliged to undergo the registration procedure?

Citizens of the Russian Federation arriving in the territory of Kyrgyzstan are exempt from registration at the place of stay for up to 30 calendar days.  A visa is also not required.

If a citizen of the Russian Federation plans to stay in the territory of the Kyrgyz Republic for more than 30 calendar days, then no later than the expiration of the specified period, such a citizen of the Russian Federation must register at any branch of the PSC, regardless of the place of stay. Registration of citizens of the Russian Federation is carried out for the period specified in the application, but not more than 6 months, with the right to further extend the registration.

7) In what language is the document circulation carried out in Kyrgyzstan, is it necessary to translate documents into the Kyrgyz language or to carry out the legalization procedure or affixing an apostille on the documents necessary for business registration in Kyrgyzstan?

Russian has the status of an official language in Kyrgyzstan, so translation of documents into Kyrgyz is not required. In addition, official documents issued in the territory of the Kyrgyz Republic are used in Kyrgyzstan without legalization / without apostille and have direct effect on the territory of Kyrgyzstan.