Types of companies
As far as registration of an organization is concerned, there are four options for company formation in Kyrgyzstan: a limited liability company (LLC); the maximum number of permitted shareholders is 50 (CJSC); Unlimited participants can create an organization (OJSC); a branch of a non-resident isn’t considered a separate legal entity. Rather, it acts as a dependent organization. In case a company exceeds the maximum number of shareholders but fails to reorganize before the end of the calendar year, regulatory authorities may seek the liquidation of the company through the court.
An organization in Kyrgyzstan can run its venture on one of the two taxation principles: сommon (CST) and unified imputed income tax (UTII).
A company has to pay a 10 percent income tax under the CST (common taxation system). Additionally, sales tax exists – varying from 0 percent to 3 percent based on the method of payment, the type of business activity, and other conditions. Paying VAT is compulsory for certain product groups.
As far as dividends are concerned, they’re subject to a 10 percent standard tax. However, the tax rate could change in case the securities holders are legal entities and individuals from nations wherein DTA is valid.
The taxation of business on single tax varies from CST in the below aspects: no income tax, no sales tax, no VAT.
The single tax could vary from 2 percent to 6 percent of the company’s profits. The calculation of the rate depends on the type of business activity and how the organization pays the taxes – through a current account or in cash. This system works for companies whose profits don’t cross 8 million soms, which approximates to 118 thousand dollars.
High Technology Park (HTP) is another important aspect of company formation in Kyrgyzstan. It’s a special economic zone where the participants aren’t required to pay income tax on VAT and sales tax. In addition to this, the personal income taxes of workers of companies that run in the HTP are slashed from 10 percent to 5 percent. However, it’s compulsory for Park participants to pay a special fee of 1 percent of their revenue for the previous quarter.
IT organizations could be a member of HTP, making software, upgrading existing software applications, working and promoting the export of IT, etc. Participants get a six-month membership through the initial registration in the HTP. Subsequently, the company has to submit a report about its activities. If the company’s activities meet the requirements of the economic zone, its membership becomes perpetual.
Would you like to start with company formation in Kyrgyzstan or do you have additional questions, please contact our specialists!