Kyrgyzstan's accession to the Eurasian Economic Union exposed the problems which have been developing in Kyrgyzstan's economy throughout its' sovereign existence. Among other things, the country has faced with an unprecedented influx of contraband. The panics stroke everybody: as the government officials, losing precious pennies in the budget, so entrepreneurs, who suffer from illegal competition. It was decided to deal with the universal evil by obstructing and administrative measures. However, in reality, "brilliant" ideas of the government could result in the collapse of the entire domestic business.
Where does contraband come from? From neighbors
On August 12, 2015, when the customs border between Kyrgyzstan and Kazakhstan was opened, the State Tax Service got a serious task - to monitor the import of goods to the Kyrgyz Republic and the payment of taxes. To do this, the entrepreneurs filled in the corresponding tickets on the border. The document indicated the amount of goods and price of the import into the country. Tax officers were on duty at the Kyrgyz-Kazakh border for two months.
However, their efforts were not crowned with success. When the republic marked 100 days from the date of its accession to EEU, it faced with impressive batches of imported flour, petroleum products, consumer goods and food. Then the entrepreneurs also sounded the alarm. Brought without payment of duties and taxes, the goods cost much cheaper, so the conscientious business was loosing selling markets at a catastrophic speed.
"The main problem of manufacturers Kyrgyzstan is smuggling. Our manufacturers and suppliers draw up all the documents and pay taxes. Similar goods are imported also by smugglers. But they do not pay taxes, they do not have any permission documents from Russia or from Kazakhstan. Of course, these products are much cheaper. We can not compete and are forced to close enterprises, send people on leave without pay. There are cases when storehouses of manufacturers are robbed, and then these products pop up on our territory later on. We would like the police, instead of "nightmarizing" our business, to be engaged in the fight against smuggling," Chairwoman of the Association of Suppliers Gulnara Uskenbaeva said then.
As a result, Kyrgyzstan has sent special duty groups to all the checkpoints on the border with Kazakhstan to control the import of fuels and lubricants to the republic. The flow of contraband has decreased. But what about the other goods? The government began frantically thinking of a way to limit their illegal import into the country.
Unrecognized genius of the Cabinet
The result was not long in coming. By late January, the Cabinet showed the world a resolution on the order of import and export of goods. The document canceled tickets on the passage of state control, which was filled in by the organizations and individuals, engaged in business, during import or export of goods by vehicles across the state border of Kyrgyzstan. Now importers and exporters are required to notify the tax authorities of the impending movement of goods within the EEU. And they should do it a month before the proposed import or export of goods. The order will take effect from March 10.
Entrepreneurs froze in disbelief. Is it the vaunted care for the business? That is how the authorities are trying to help with overcoming the crisis and finding a niche in the EEU market?
"I think this is a crazy order. When the decision was still under discussion, we immediately spoke out against it, informing the Deputy Minister of Economy on Fiscal Policy. But he did not listen to the business. When the resolution comes into force, we will have huge problems," the Chairwoman of the Association of Suppliers Gulnara Uskenbaeva said.
The more so, the new order applies to absolutely everyone, even those who are engaged in small businesses. What do you think, what results will this idea bring in practice? A month before the possible import of the goods a person should get this "notification," submit it to the shipping company that will deliver its cargo. As a result, the business loses the opportunity to quickly buy some goods. After all, not every entrepreneur knows exactly in advance how much and what goods he will need in 30 days. There are enterprises the work of which is aimed at a specific customer.
"I have not got proper words now. I have learned today that a new brilliant law on new rules of import of goods into the country comes into force on March 10. How was it possible to come up with this in a country where almost all production is dependent on imports? Look at the touching concern of the state when creating "equal competitive terms for domestic producers." Now, to bring any product to Kyrgyzstan, you have to notify the tax authorities about it 30 days before. Can you imagine what a nightmare it is in practice? It means wild queues in the Tax Service and indirect extortion by requiring somewhat documents," a businessman outraged.
Beat up your friends to make foes fear
Logic of the State Tax Service can be understood. There are too many goods in our shops, which are registered nowhere and by no one. After the customs has left the border, it became more difficult to monitor the situation. And the department virtually has no effective leverages. Therefore it has to invent more and more new ways of administrative influence.
More surprising is other thing. Why those in power are so diligently trying to cut the branch on which they are sitting? Small and medium businesses today are the basis of the economy. The most of jobs is created there. Now Kyrgyzstan has fully felt the impact of the economic crisis in the region. Exactly today, not in the foreseeable future, the business needs the support of the state. But it gets another kick in the end. As the saying is- beat up your friends to make foes fear...