Law and Reality: April 2006 Newsletter
#34
This
newsletter updates businesses on changes in legislation or proposed changes in
legislation, as well as providing brief reports of business experience dealing
with government officials, tax and customs administration, registration,
licensing, and the court system so that others can benefit from the
experience. Only brief summaries are
given. If you would like more information or to contribute to the next issue of
“Law & Reality” please contact the IBC Osh Office Lawyer, Mr. Erkin
Madmarov at (0 3222) 28253, 29062 or email to erkin_ibc@yahoo.com
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#34/П1 |
Law – Customs
Tariff |
Commentary – implications for business
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Status:
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Draft Gov |
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JK Apr. |
Enacted |
Which
Business Sectors: |
Import |
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Statute
Number: |
# 81 |
Which Legal Registrations: |
All types of legal forms |
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Statute
Name: |
Law
of the Kyrgyz Republic “On Customs Tariff
of the Kyrgyz Republic” |
Comments: |
Annual setting of customs tariffs
for imported goods |
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Important Dates:
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Adopted
by the Jogorku Kenesh on May 29, 2006. Enter into force after 15 days from
the day of official publication. Published in “Erkintoo” newspaper on April
7, 2006, # 25. |
Business
Information: The
present Law entered into force on May 22, 2006. Upon effectuation of the given Law, the customs tariff rates, approved
for 2005, had been valid. |
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The
text of the Law is available in the Toktom database and by request from the
following address: erkin_ibc@yahoo.com |
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Possible action for business
managers to consider: (1) consider
a number of changes |
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#34/П2 |
Law – Tax Legislation |
Commentary – implications for business
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Status:
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Draft Gov |
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Gov Appr. |
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Enacted |
Which
Business Sectors: |
All areas of activity |
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Statute
Number: |
# 212 |
Which Legal Registrations: |
All legal forms |
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Statute
Name: |
Resolution
of the Government of the Kyrgyz Republic “On
Entering into Force of the Code on Taxes and Fees of the Kyrgyz Republic” (Tax
Code) and the Code on Taxes and Fees of the Kyrgyz Republic (Tax Code) |
Comments: |
The Government expressed its
viewpoint on given drafts and what is the opinion of business? |
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Important Dates:
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Approved
on March 31, 2006 |
Businesses
opinion was disregarded in draft laws. According to monitoring conducted by the
Chamber of Tax Consultants, the given wording (Tax Code) does not solve many problems,
such as the level of corruptibility. No tax burden was evaluated, the guarantees
of taxpayers are diffused, inconsistency and unclear regulations. |
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It is established by the Resolution
that: 1. The Government agrees
on the draft laws of the Kyrgyz Republic “On Entering into Force of the Code
on Taxes and Fees of the Kyrgyz Republic (Tax Code)” and the Code on Taxes
and Fees of the Kyrgyz Republic (Tax Code), (as of April 25, 2006). 2.
Draft laws (of Tax Code) of June 28, 2005, earlier submitted to the Jogorku Keneshare,
were recalled by the Government. The
text of the Resolution is available in the Toktom database and by request from
the following address:erkin_ibc@yahoo.com |
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Possible action for business managers to consider: Prior
to adoption of drafts by the Jogorku Kenesh, it is necessary to lobby business
interests in order to amend the given draft Law, taking into consideration business
opinion. |
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#34П3 |
Law
– National Tax Policy |
Commentary – implications for business
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Status:
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Decree of President |
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President’s Office |
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Enacted |
Which
Business Sectors: |
All areas of activity |
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Statute
Number: |
УП # 172 |
Which Legal Registrations: |
All legal forms |
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Statute
Name: |
Decree
of the President of the Kyrgyz Republic “On Mid-Term Strategy for Improvement
of Tax Policy in the Kyrgyz Republic for 2006-2008” |
Comments: |
Government strategy to
improve tax policy for 2006-2008. |
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Important Dates:
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Approved
on April 13, 2006 |
The
core of the Strategy for Improvement of Tax Policy is new wording of the Tax
Code. While the state identify the reduction
of the general tax burden as a fundamental of the policy, in fact, fees on transport
vehicles have been increased by three times, the excise rates have been
increased, benefits on profit tax of credit unions have been canceled. The given Strategy stipulates strengthening
of the state control over economic entities and the powers of controlling
bodies were extended. At the same time, the Strategy is to reinforce the responsibility
of businesses. The Strategy cannot be accepted as a strategic document due to
lack of conceptual provisions for development of the national tax policy. |
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According to the Decree
of the President of the Kyrgyz Republic: 1.
To carry out the efficient tax policy
in future through creation of the most favorable conditions, which could intensify
the activity of economic entities, harmonization of the taxation system with neighboring
states and international partners, inflow of direct investments and execution
of the state development programs within the framework of the Comprehensive
Development Framework of the Kyrgyz Republic up to 2010 and the National
Poverty Reduction Strategy, the mid-term Strategy for Improvement of Tax Policy
was approved. 2.
The Commission on realization of the given Strategy was formed. It will elaborate
draft action plans, package of normative and legal acts, and other documents to
implement the Strategy, and submit to the Government of the Kyrgyz Republic
for consideration. 3.
Decrees of the President of the Kyrgyz Republic “On Strategy for Fiscal Reform
in the Kyrgyz Republic up to 2005” of July 16, 2002, #191, and “On Completion
of Realization of the Strategy for Fiscal Reform in the Kyrgyz Republic up to
2005 and Development of the mid-term Strategy for Fiscal Reform in the Kyrgyz
Republic for 2005-2007” of August 18, 2005, # 329, shall be invalid. The
text of the Decree is available in the Toktom database and by request from
the following address:erkin_ibc@yahoo.com |
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Possible action for business managers to consider: To
lobby interests of businesses in the Jogorku Kenesh so that not to admit the
adoption of normative and legal acts, infringing business interests. To propose
the President of the Kyrgyz Republic an alternative strategy for improvement
of the national tax policy. |
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#34/П4 |
Law
– Registration of Rights for Immovable Property |
Commentary – implications for business
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Status:
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Draft Gov |
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Gov Appr. |
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Enacted |
Which
Business Sectors: |
All areas of activity |
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Statute
Number: 196 |
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Which Legal Registrations: |
All legal forms |
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Statute
Name: |
Resolution
of the Government of the Kyrgyz Republic “On Draft Regulation “On Procedure for
Determination of Assessed Value of Taxable Immovable” |
Comments: |
To the Regulation “On
Procedure for Determination of Assessed Value of Taxable Immovable” |
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Important Dates:
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Adopted
on March 23, 2006 |
Several
methods of assessment, namely, comparison of sales, profitable, and cost-is-no-object,
are stipulated by the Regulation for assessment of the value of immovables. It
results in corruption, since any method may be applied to make the
assessment, and this would cause under/over estimation of an object. -
under paragraph 6.5 of the present draft Regulation, the individual assessment
by request of a natural person or legal entity is stipulated. However, such
assessment will be performed at the expense of own funds, thus also impairing
the rights of citizens and businesses. -
it will be necessary to determine the
annual average profit of an entity in the process of determination of the value
of non-residential immovables. Many entrepreneurs
accomplish their activity on patent basis, and it will be difficult to determine
the profit of an entrepreneur. Conflict of interests between an entrepreneur and
the state can emerge at determination of the annual average profit, as the entrepreneur
will try to underestimate his/her profit and persons, who are making assessment,
will try to overestimate it. This
will lead to corruption and will be a loophole for bribes. Besides,
under para 1.1. there are words: “except immovables, not being a taxable object”.
However, no interpretation of a type of non-taxable objects and the reason of
tax exemption for these objects is given. |
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According to the Resolution,
the Government approves on draft Regulation “On Procedure for Determination of
Assessed Value of Taxable Immovables” and sends drafts for approval by the Jogorku
Kenesh of the Kyrgyz Republic. The
text of the Resolution is available by request from the following address:erkin_ibc@yahoo.com |
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Possible action for business managers to consider: 1)
It is necessary to lobby business interests in the Jogorku Kenesh, so that to
amend this draft Regulation and do not allow for corruption, as well as to ensure
transparency at assessment of immovables. |
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