Amendments to the Tax Code were presented for public comment on March 19. The initiator of the document is the deputy of Ata-Zhurt faction Azamat Arapbaev. The proposed document exempts domestic enterprises, investing large sums in production in the home country, from income tax.
Note, the Tax Code was changed many times. Probably it is the most popular after the electoral law on the number of willing to redraw it. 24.kg news agency asked respondents in whose interests is the next attempt.
Azamat Arapbaev, deputy of the parliament:
- We stand with one foot in the Eurasian Economic Union. We say that we need investors. Invite everyone: "Come. We have the best conditions." But do not so much. We need to create preferences. We looked at the experience of Kazakhstan. During the years after the joining the Eurasian Economic Union about 4,000 new joint ventures were opened there.
We also should think about this question. So I proposed to amend the payment of income tax for large enterprises in the tax code. Firstly, it is proposed to exempt from tax only those that will appear and bring the equipment to Kyrgyzstan after January 1, 2015. Secondly, the company must have absolutely transparent accounting. No "black" and "white". We put a condition that wage of staff "off the books" (and they should not be less than 50) was at least 30,000 soms. Naturally, they will have to pay a substantial amount of income tax and payments to the Social Fund. Thirdly, the action preferences apply to 5 years. After that, the company starts to pay income tax.
I think this is an important step. It is necessary to adopt this norm in the near future. Take, for example, Samsung Company. It produces televisions and refrigerators for the market of the Eurasian Economic Union. And why not give preference in order it place its production here?
Zamirbek Osmonov, Chairman of the State Tax Service:
- Deputies propose to exempt newly established enterprises from income tax. We are guided by the Tax Code. It has 8 basic principles. One of the most important - the principle of equality. If we exempt from tax individually, how will we replenish the budget then? On the other hand, I agree that it is necessary to attract investors. But we should use other methods. If you look at the tax rates in the countries of the Eurasian Economic Union, the lowest - in our country. At the same time our budget is almost 80 percent made up of taxes. There are almost no other sources of income. Therefore, we should be very careful with such issues and make reasonable decisions.
Alla Izmalkova, deputy of the parliament:
- I fully support the initiative. Moreover, I am one of the initiators of the bill. Today Kyrgyzstan can't boast of a good investment climate, but we should attract investors somehow. Income tax - a tax that, as a rule, many are trying to hide. On the other hand, if large joint-stock companies and limited liability companies, for them, on the contrary, it is advantageous to show a profit. The law will stimulate the opening of business in our country. We've boasted a lot that we have the most favorable tax climate, it turned out - nothing like that. Kazakhstan has more favorable conditions. They are ahead of us. Now we need the initiative to make the country more attractive.
Of course, one needs to make concessions for existing large enterprises either. For example, we offer an amnesty on insurance premiums. We should also do something to make our enterprise to quickly adapt to the norms of the Eurasian Economic Union.
- Why did you come the initiative so late?
- In part, I am guilty of that. When I came to the Parliament, I suggested a similar bill - the release of new companies from income tax for 3 years. Then it didn't pass. The government didn't support it. In general, such laws are very difficult to pass through the cabinet. They don't offer anything themselves, and try to "suppress" initiatives of deputies. Negative conclusions immediately appear. In particular, I was struggling for the law on amnesty on insurance premiums more than a year. Only now, with great effort, it passed the first reading.
Ivan Klimentev, businessman, Kara-Balta town:
- I don't agree with the proposal. I understand that the situation is complicated, there is no money for the development of own production in Kyrgyzstan, but why is it proposed to exempt from tax only new and large companies? But what about the small and medium businesses? So, we have to deal with the problems alone? After all, we also have a hard time following the joining the Eurasian Economic Union. Authorities are ready to make any concessions in order foreign money come to us, but forget about us.
Budget expenditures are increasing. Mainly it consists of revenue from taxes and customs duties. So, this part should be increased. Where to get the money if we have such a luxury environment for foreign investors? The answer is obvious - small and medium businesses will pay. Local businessmen don't have big money. To create a new large enterprise is possible only at the expense of foreign capital. Dissatisfaction with the foreign businessmen is growing in the country. If this amendment is accepted, it will only intensify.
Maksat Ishenbaev, former vice-president of the National Bank of the Kyrgyz Republic:
- I see no reason to change the tax rate on profits. The problem is not in it. It's quite liberal - only 10 percent lower than in other countries. There won't be significant easing exemption enterprise from ten percent tax. Businessmen are ready to pay the money. Especially if it is big business and foreign investment.
Deputies are also trying to fight the shadow economy. That's good. But a more effective solution to this problem would be a reform of the Social Fund. Social expenditure - a big load for entrepreneurs. There should be a single social payment - no more than 18 percent of income. We are constantly told that a significant part of the economy is in the shadow, but entrepreneurs are there because of the salary. People get money in envelopes to avoid paying large contributions to the Social Fund. Much surveys had already been done, entrepreneurs always say that the biggest problems are in this area. It is worth to pay attention. It is necessary to examine the situation in other countries and then make a decision.
Shahida Urmatova, owner of a shop in Bishkek:
- Of course, a pity that the deputies care only about big companies. Sometimes completely forgetting about the small and medium. With entering the Eurasian Economic Union it will be equally hard to all - small and large. On the other hand, I support the idea. After the collapse of the Union, few big industrial companies have left. Small and medium enterprises still can't give a large number of jobs. Almost all the years of independence we only trade, produce nothing, and in fact we could be as clean as any.
Recently I spoke with relatives from Kazakhstan. A lot of businesses opened there after the joining the Customs Union. We also need to revive the industry. But there is no money. News constantly says about this. Big foreign companies, which can invest in a large way, are our white hope. We need it as breadth of life. But it should be beneficial for them too. That's why I welcome the bill, if it revives our industry and processing. Let them not to pay income tax for 5 years. During this time the production will be organized, get on their feet, and then will pay big taxes.
Kubanychbek Idinov, economist:
- If we look at this provision in terms of the budget, then it won't be useful for the treasury. Only create additional problems. But it is necessary for business development. Exemption of new enterprises from profit tax will give an impetus to development. They will try to work neatly, accurately calculate the costs and revenues. Now many people have double-entry in order to avoid paying income tax. As a result, there are no big revenues. Many countries in the world use tax exemption for new enterprises. This method is quite possible to be applied here.
Tolonbek Abyrov, Doctor of Economics:
- Every developed state holds a good tax policy in relation to private entrepreneurs. Release them from a number of taxes, including income. There is a large range of benefits, allowing new businesses to develop rapidly. For example, the company is exempt from income tax, VAT, duties on the import of high-tech equipment or design development. This is a common practice. Exemption from income tax - a good support. This is made to ensure that businesses are not left in the shadows, not afraid to show a profit. But the rule should be applied exactly to production. It would be nice if the norm to be applied to those who are focused on innovation product.
The Ministry of Economy hasn't commented on the initiative yet. The deputy head of department Adylbek Kasymaliev referred to the fact that the document hasn't been studied in detail. The department will be ready to voice its position soon.