Entrepreneurs will begin paying VAT on grain imports in September 2018. The bill on amendments and additions to the Tax Code was submitted for public discussion.
The Kyrgyz Government has freed grain imports from VAT for the milling industry. Moreover, its further processing and sale was subjected to taxation. It supposed the providing of VAT payment deferment. There would be no budget losses. But, given that not all taxpayers conscientiously carry out business activities, and administration of indirect taxes became complicated, there was noted the possible loss of the estimated budget at 220.3 million soms.
When considering and adopting the law, its concept was changed. As a result not only grain, but also flour was exempt from payment of VAT on imports. This led to the loss of 499.6 million soms from the revenue part of the budget.
Despite the effectiveness and the need to provide incentives, the government decided to abandon them. The reason - the difficult economic situation, the budget deficit and commission of deputies from Respublika - Ata Jurt faction.
Cabinet proposes to abolish VAT exemption by new bill:
- on imports of flour - from January 1, 2017,
- on imports of grain - from September 2018.
It should be noted that earlier representatives of the International Monetary Fund also urged the Government to abolish VAT exemption on the import of flour. The organization believes that there is not much use of it. In addition, a limited number of businessmen can use the privilege that is unfair in relation to other taxpayers.