Kyrgyz Republic

Ease of Doing Business Rank: 80

Overview

 

Geographic location

Kyrgyz Republic, or Kyrgyzstan, is a landlocked country in Central Asia.

Kazakhstan and Russia lie to the north, Uzbekistan and Turkmenistan lie to the west, Tajikistan lies to the south and China to the east.

Spoken language

Kyrgyz is the national and state language, while Russian is the official and interethnic language used in the country. Approximately 88% of the population speaks Kyrgyz and about 67% speak Russian.

Minority languages include Uzbek and Uyghur. English, French and German are spoken by small populations, primarily as a second language.

Population

The 2020 population estimate is 6.52 million.

According to 2019 data, Bishkek is the largest city (1.01 million), followed by Osh (270,347) and Jalal-Abad (109,189).

Popular industries

The top industries in Kyrgyz Republic are agricultural products, small machinery, textiles, food processing, cement, shoes, lumber, refrigerators, furniture, electric motors, gold, mercury, uranium and natural gas.

Education

The Legatum Prosperity Index ranks Kyrgyz Republic’s educational system 77th out of 167 countries.

Popular entity types

The most common type of business entities in Kyrgyz Republic are Limited Liability Company and Joint Stock Company.

The majority of businesses are in the form of a Limited Liability Company.

Kyrgyz Republic incentives for business

Kyrgyz Republic offers a foreign tax credit if the business participates in a double taxation treaty with the country.

Businesses may enjoy a profit tax and WHT exemption if they exceed annual turnover, monthly profit and charter capital requirements. However, some industries such as IT, retail and mining do not qualify.

The country has four economic zones offering tax and customs duties exemptions and unrestricted currency transfers. However, companies may pay fees based on sales and operational region.

Kyrgyz Republic’s Park of Innovative Technologies offers many incentives to qualifying companies including profits tax, sales tax and VAT exemptions. Additionally, employees and individual entrepreneurs pay 5% income tax.

Agricultural producers and traders and those operating machine-tractor stations and trade-logistic centers for agricultural purposes may qualify for income tax, VAT and sales tax exemptions. Additionally, companies enjoy a 50% property tax reduction and a simplified payroll tax system.

Companies engaged in electric, thermal, liquid gas and biofuel from renewable sources may qualify for a 5-year corporate income tax exemption. As well, equipment and goods required for the construction of renewable energy plants are exempt from VAT.

History & Features

 

Main cities for business

Bishkek is the capital and financial center of the country.

Popular historical & tourist attractions

Kyrgyz Republic is a dichotomy of Soviet-planned cities and stunning, largely untouched landscapes. It has 3 UNESCO World Heritage Sites including the Sulaiman-Too Mountain, revered as sacred for at least one and half millennium. This site has 17 places of worship which are said to help cure barrenness, headaches and back pain and promote longevity.

The region was also part of the Silk Roads that linked ancient Asian and Near East societies said to be instrumental in the development of many great civilizations. A minaret in Burana from the 11th century still points the way.

The Song Kul lake area is known for its vast pastures that attract nomads annually. They live in traditional yurts, ride horses and graze animals and remain mostly untouched by the modern world.

Jeti-Ögüz is an abrupt serrated ridge of red sandstone cliffs and one of the country’s most photographed spots. The ‘Seven Bulls’ thrust out of the green landscape and offer exceptional views at sunrise or sunset.

The capital city of Bishkek includes Soviet era architecture in Ala-Too Square such as the State History Museum and the National Museum of Fine Art. The city also has a massive Victory Monument built to commemorate World War 2 and an imposing statue of Lenin.

However, Bishkek is not lost in the past. It has a well-appointed zoo, amusement parks and even an IMAX theater.

History

The history of the Kyrgyz people and the land now called Kyrgyz Republic goes back more than 2,000 years. The region was ruled by many empires, including the Turks in Medieval times.

However, it was the Mongol invasion of Central Asia in the 13th century that led to the region’s independence. The Mongol Empire dominated for 200 years and Kyrgyz Republic did not regain its freedom until 1510.

By the 17th century most Kyrgyz tribes lived in divided groups. Later, the region became part of the empire of China and then an Arab khanate.

In 1775, the leader of one Kyrgyz tribe established first diplomatic ties with the Russian Empire. By 1876, Russia had formally annexed the region which led to numerous revolts and Kyrgyz migration to the mountains or Afghanistan.

The Soviets established power in the first part of the 20th century. This led to a revolt in 1916, which was brutally supressed. By 1936 the area was the Kirghiz Soviet Socialist Republic.

The area remained under Soviet rule until the dissolution of the Soviet Union in 1991. Kyrgyzstan became a new independent republic that same year and was renamed the Kyrgyz Republic in 1993.

However, the new nation went into sharp economic decline and the government was accused of widespread corruption. Additionally, large numbers of Islamist guerrillas prompted the US and Russia to establish military bases in the country.

In 2005, suspected corruption after the election led to mass demonstrations. The government collapsed and the president fled the country and resigned. The new leader employed authoritarian practices to assert his power, but met with great criticism and resistance.

The results of two elections in 2007 and 2009 elections were heavily criticized. Unrest in 2010 led to thousands of protesters storming the government building in Bishkek and many deaths and injuries. Demonstrations broke out in other cities and the government declared a state of emergency. The president fled and the country formed an interim government.

Eventually, the government authorized the use of deadly force to restore order as looting and unrest continued. Ethnic violence erupted in the south and many died or fled across the border.

In 2010, a new constitution was enacted and fair elections proceeded without violence. Nonetheless, the country continued to struggle with governmental corruption.

In 2017, the president was arrested and charged with corruption and other criminal charges. A new president took office later that year.

Today, the country operates under a Parliamentary Republic. They have an emerging mixed economic system.

Other relevant facts

According to 2011 data, most inhabitants practice Islam (88.0%), followed by Eastern Orthodox Christianity (9.4%), Protestantism (1.7%), other Christian denominations (0.3%) and other religions or unaffiliated.

According to 2019 data, most people identify as Kyrgyz (73.5%), followed by Uzbek (14.7%), Russian (5.5%), Dungan (1.1%) or other ethnicities (5.2%).

Additional Information for Business

According to Forbes’ 2019 Best Countries for Business, Kyrgyzstan is the 108th best country in the world for conducting business.

The 2019 Index of Economic Freedom rates the Kyrgyz Republic 79th globally and states, “Political turmoil adds to policy volatility and uncertainty, hampering economic development. Political rivalries and powerful special interests hold back implementation of deeper structural reforms.”

World Bank’s “Doing Business” rankings rate the Kyrgyz Republic 80th for ease of doing business in the world.

    Kyrgyzstan Entity Support Services by Blueback Global

    Blueback Global provides a one-stop integrated solution to managing all aspects of your global operations. We can take the burden off you or your company’s internal resources by managing Entity Setup, Local Payroll, Accounting, Tax Reporting, HR Admin and Regulatory Compliance matters associated with operating in a foreign country. Our services are designed to be flexible and customized, so whether you are starting from entity registration, or have already registered but need support in setting payroll or hire employees, we can help at every point of the process.

    The common scenarios that may give rise to the need for Blueback Global’s services include the following:

    With our integrated approach, you can expect the following experience:

    We have an initial complimentary meeting to discuss the scope, objectives and plans for your expansion plan into Kyrgyzstan. After this meeting, you can expect a follow-up proposal from Blueback Global within 1 to 3 business days, that outlines that the approach, scope of work and expected deliverables and outcome. Thereafter, our implementation team will then work closely with your team to register the local entity, set up payroll, accounting process, employee social security and benefits. We will then develop a mutually agreed timeline and approach for ongoing payroll, accounting, tax reporting and HR support. Blueback Global will set up a compliance calendar so that you know exactly what and when compliance items such as tax reporting and payroll returns are due. We will of course facilitate all of these, so you do not have to keep track of the compliance dates.

    Our goal is to make the process as smooth, simple and successful as possible, and remove the anxiety of operating in a foreign location, to deliver a great customer experience.

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