flag Kyrgyzstan Kyrgyzstan: Investing

FDI in Figures

According to UNCTAD's World Investment Report 2021, FDI flows to Kyrgyzstan were negative by USD -331 million in 2020, a significant drop from the USD 404 million recorded in 2019, due to the global economic health crisis triggered by the Covid-19 pandemic and falling raw material prices. The stock of FDI reached USD 4.2 billion in 2020. Most FDI flows have gone to mining-related activities and other sectors such as finance, petroleum product manufacturing, but FDI to activities not related to mining generally remains weak. The main investors in Kyrgyzstan are Canada, China, the United Kingdom, Russia and Kazakhstan. According to preliminary figures from the National Statistics Committee, in January-September 2021 the inflow of foreign direct investment amounted to over USD 503 million.

Facilitating the entry of FDI flows into the country has been a key priority of the Kyrgyz government in recent years. However, improvements have been slow, and the business legal and regulatory framework is still considered inadequate, the same as for infrastructure. Environmental disputes over mining activities have been multiplying in recent years. In May 2021, the Kyrgyz government took control of the Kumtor gold mine owned by Centerra Gold after the passage of a law allowing it to impose external management for up to three months on mining companies operating under a concession agreement if it was found to have violated environmental regulations or endangered the environment. In October, the government announced that the state-owned company Kyrgyzgeologiya would now be responsible for all precious metals mining in the country. Furthermore, the country’s judicial system is not fully independent and susceptible to external political influence, and investors denounced a lack of transparency in the public procurement process (in the last five years, foreign investors have filed twenty different lawsuits against the Kyrgyz government). At the moment, there are five Free Economic Zones (FEZs) in the Kyrgyz Republic: Bishkek, Naryn, Karakol (Issyk-Kul province), Leylek (Batken province) and Maimak (Talas province). By law, the Kyrgyz Republic guarantees equal treatment to investors and places no limit on foreign ownership or control. The tax burden on repatriation of profits by foreign investors has been reduced to conform to the tax rate for domestic investors. In the latest
Doing Business report published by the World Bank, the country ranked 80th out of 190 countries, marking a decline of 10 spots compared to the previous edition. This was despite the country making significant progress on payment of taxes (the government has reduced the tax burden on repatriation of profits by foreign investors to conform to the tax rate for domestic investors) and getting credit.

 

Country Comparison For the Protection of Investors

  Kyrgyzstan Eastern Europe & Central Asia United States Germany
Index of Transaction Transparency* 7.0 7.5 7.0 5.0
Index of Manager’s Responsibility** 5.0 5.0 9.0 5.0
Index of Shareholders’ Power*** 8.0 6.8 9.0 5.0

Source: Doing Business - Latest available data.

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

 
Foreign Direct Investment 201920202021
FDI Inward Flow (million USD) 404-402248
FDI Stock (million USD) 4,626.04,152.94,233.3
Number of Greenfield Investments* 6.01.00.0
Value of Greenfield Investments (million USD) 23880

Source: UNCTAD - Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 

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Tax Rates

Value Added Tax (VAT)
12% (standard rate).
Certain supplies are zero-rated: exports (except for certain limited types of export), international transportation, and services connected with the service of transit air flights related to international transportation.
Supplies and exports of gold and silver alloy and refined gold and silver; supplies of pharmaceuticals; land plots; supplies and import of jet fuel consumed by international air carrier operators; residual buildings and construction; insurance, pension, and financial services; and export of works and services are exempt.
Company Tax
10%
Withholding Taxes
Dividends: 0 (resident company)/10%, Interests: 0 (resident company)/10%, Royalties: 0 (resident company)/10%.
Social Security Contributions Paid By Employers
17.25% (15% Pension Fund, 2% Obligatory Medical Insurance Fund, 0.25% Healthcare Fund).
Other Domestic Resources
State Tax Service
Overview of Kyrgyzstan's tax measures in response to Covid-19
Consult Doing Business Website, to obtain a summary of the taxes and mandatory contributions.
 
 

Individual Taxes

Personal income tax Single flat rate of 10%
 
 

Country Comparison For Corporate Taxation

  Kyrgyzstan Eastern Europe & Central Asia United States Germany
Number of Payments of Taxes per Year 26.0 13.9 10.6 9.0
Time Taken For Administrative Formalities (Hours) 220.0 226.2 175.0 218.0
Total Share of Taxes (% of Profit) 29.0 36.5 36.6 48.8

Source: Doing Business - Latest available data.

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Investment Opportunities

Tenders, Projects and Public Procurement
Asian Developement Bank, Proposed Projects in Asia
DgMarket, Tenders Worldwide
Setting Up a Company
Consult Doing Business Website, to know about procedures to start a Business in Kyrgyzstan.
Useful Resources
Committee on Foreign Investment and Economic Development
 

Business Setup Procedures

Setting Up a Company Kyrgyzstan Eastern Europe & Central Asia
Procedures (number) 4.00 5.26
Time (days) 10.00 11.78

Source: Doing Business.

 
 
 

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Latest Update: September 2022