According to the current Tax Code of Kyrgyzstan, VAT is a national tax, meaning it is applied and paid under the same rules across the entire Republic. The main provisions regarding VAT are outlined in Section 9 of the Tax Code.
Overview
The Value-Added Tax (VAT) is an indirect tax. Its principles are generally similar in any country where it is legislated. VAT represents the withdrawal of a portion of added value into the state budget, defined in the Tax Code of Kyrgyzstan as a taxable supply.
In practice, this means that businesses include VAT in the price of goods, services, or work, regardless of whether they are selling to other companies or individuals. Hence, the tax is ultimately paid by the buyer. Businesses charge VAT on the goods or services they sell and deduct the VAT paid on purchases, effectively taxing the added value.
Who is Liable to Pay VAT in Kyrgyzstan?
VAT payers under the law in 2025 include:
- Individual Entrepreneur and LLC under the general tax regime (practically all businesses that have not opted for a special regime);
- Entities engaged in taxable import operations;
- Foreign companies providing services, performing work, or engaging in e-commerce with individual customers who are citizens of Kyrgyzstan, if the place of supply is within Kyrgyzstan.
Foreign organizations do not directly pay VAT themselves; instead, tax agents handle the payments on their behalf.
Exempt from VAT are legal entities and individuals with the status of agricultural producers, agricultural cooperatives, and machine-tractor stations (MTS). Non-profit organizations are also exempt if they do not engage in taxable supplies.
VAT Rate
A standard VAT rate of 12% applies to all businesses, except for certain types of supplies subject to a 0% rate. The following are VAT-exempt:
- Imports of fixed assets under specified codes from the Tax Code, including fixed assets for the chemical and petrochemical industries and agricultural producers from 2023;
- Import of fixed assets under leasing agreements;
- Processing of tolling raw materials imported from member states of the Eurasian Economic Union (EAEU);
- Export of goods (excluding ores, concentrates, and alloys);
- International transport services (there are no restrictions regarding the destination or status of the country receiving the goods);
- Power supply to pumping stations used for irrigating agricultural land;
- Services for transit flights, and more.
The origin of all these goods must be documented. For processing tolling raw materials, completed work certificates are required. The list of documents for each type of activity is approved by the Cabinet of Ministers.
0% VAT Rate and VAT-Exempt Supplies
In addition to the 0% VAT rate, there are also VAT-exempt supplies, which include:
- Real estate transactions, including residential buildings and land plots;
- Agricultural products and processed agricultural goods, including feed;
- Utility services provided to individuals for household purposes;
- Financial services (only those specified on an approved list, such as the sale of real estate by banks);
- Goods related to Islamic financing;
- Medicines and various medical products, including vaccines and prosthetic-orthopedic constructions, according to lists approved by the Cabinet of Ministers.
The same VAT rates apply to foreign enterprises as to residents of Kyrgyzstan, unless otherwise specified by law.
VAT Registration
To register as a VAT payer in Kyrgyzstan, all procedural requirements established by law must be followed. The timing of registration is important:
- If the taxpayer is registering as an individual or legal entity for the first time, VAT registration coincides with the date of tax registration.
- If the taxpayer is switching from a special tax regime to the general one, the registration date is based on the application and takes effect from the following month.
- If the taxpayer has newly started business activities, the registration date begins on the first day of the month following that event.
If a taxpayer is required to register but fails to do so or submits a late application, they are still recognized as a VAT payer from the date when they were obligated to register. However, since this is a violation of the law, penalties will be applied.
Cancellation of registration occurs when switching to a special tax regime or when the taxpayer ceases activities, such as in cases of liquidation or bankruptcy. In any case, the taxpayer must submit a relevant application to the tax office. However, the cancellation of registration does not exempt them from paying taxes for previous periods
Taxable Object and Date of Tax Liability
Under the law, the taxable objects (or base) include:
- Taxable supplies: This refers to the transfer of ownership of goods, provision of services, rental agreements, and other activities listed in Article 258 of the Tax Code.
- Taxable imports: These are determined in accordance with the requirements of the Tax Code.
The law also specifies non-taxable objects, which include:
- Transfer of goods under trust management agreements
- Transfer of property without a transfer of ownership
- Transfer of assets during reorganization
- Loss of goods within natural shrinkage norms
- Loss of assets due to force majeure
More detailed information on taxable objects is provided not only in the Tax Code but also in various regulatory documents.
It is equally important to understand the date when tax liability arises. In general, this is the date of supply, but there are specific details:
- For goods, it is the date when ownership is transferred.
- For services and work, it is the date of the completion and acceptance act.
- For construction and installation work, the tax liability arises when the work is completed and payment is made simultaneously.
- For imports, the liability date is determined according to customs legislation.
Place of Supply of Goods
It is important to determine the place of supply, especially for import operations. Typically, it is the location where the goods were delivered. However, if transportation is involved, the place of supply is where the goods were located before transportation began.
This distinction is important because goods can be supplied from EAEU member states or third countries. In some cases, goods originating from outside the EAEU may enter Kyrgyzstan via another EAEU country, creating potential legal conflicts. Consulting with experienced tax and customs law experts is recommended in such cases.
VAT Reporting
Under the law, VAT payers are required to submit regular reports. The tax period for VAT is set at one month, and reports must be submitted monthly. The form of the report is approved by regulatory documents.
