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Kyrgyzstan plans E-Commerce Tax

Kyrgyzstan plans to introduce an e-commerce tax to cover sales of digital services from non-resident digital businesses with a proposed effective date of January 1, 2022.

Kyrgyzstan is planning to become the next Central Asia state to change its tax rules when it comes to digital services supplied by non-resident digital businesses.

The possibility is contained in a draft bill that is before the Kyrgyzstan Parliament. The taxation of digital services, specifically those sales supplied by non-resident businesses, has gathered pace in Central Asia in recent years. With this proposal Kyrgyzstan is likely to follow the path of its neighbours Uzbekistan (where similar VAT rules are live since January 1, 2020); Tajikistan (VAT rules live since January 1, 2021), and Kazakhstan where new VAT rules also come into effect on January 1, 2022.

It should be noted that it is still unclear what specific direction Kyrgyzstan is taking with its plans for an e-commerce tax on digital services. It is, for example, not clear if it will be in the form of VAT (at 12%) or as a type of Digital Services Tax (DST), at 0.1% for a transitional three-year period and 2% thereafter.

Kyrgyzstan VAT public consultation 

A draft bill is currently at the stage where the Kyrgyzstan government is gathering feedback via a public consultation. The public consultation period is open until October 27, 2021. When this process is complete the draft bill will return to Parliament for further discussion.

If this draft bill becomes law, it is expected that the introduction of Kyrgyzstan’s e-commerce tax on digital services supplied by non-resident businesses will come into effect on January 1, 2022. This is a tight compliance window for non-resident businesses; however, we do understand that there is likely to be a transition period.

Acknowledgement: With thanks to the team at GRATA International, Bishkek, Kyrgyzstan, for their help in compiling the information in this article. 

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