Tax_Code_140406

1. Legislation of the Kyrgyz Republic on taxes and fees shall consist of this Code, normative legal acts of the Jogorku Kenesh of the Kyrgyz Republic adopted in accordance therewith (hereinafter in this Code referred to as legislative acts on taxes and fees), and normative legal acts on taxes and fees adopted by the Local Keneshs in accordance with this Code (hereinafter referred to as legislation on taxes and fees).

2. This Code shall establish the system of taxes and fees collected to the budget, and general principles of taxation and imposition of fees in the Kyrgyz Republic, including:

1) types of taxes and fees collected in the Kyrgyz Republic;

2) the grounds for emergence, alteration, termination and the procedure for fulfillment of obligations to pay taxes and fees;

3) establishment, introduction, and invalidation of the local taxes and fees;

4) rights and duties of the taxpayers, tax authorities and other parties to the relations regulated by tax and fee legislation;

5) forms and methods of tax control;

6) responsibility for committing tax violations;

7) the procedure for appeals against decisions and acts of the tax bodies and actions and(or) inaction of their officials.

Article 2. Relations regulated by the legislation on taxes and fees

1. Legislation on taxes and fees shall regulate relations involving establishment, introduction and collection of taxes and fees in the Kyrgyz Republic, as well as relations arising during the exercise of the tax control, the appeal against decisions and acts of the tax bodies, the action and(or) inaction of their officials, bringing to responsibility for violation of the tax legislation unless otherwise provided by this Code. Relations regulated by the legislation on taxes and fees shall hereinafter in this Code be referred to as tax relations.

Legislation on taxes and fees shall not apply to relations involving establishment, introduction and collection of customs payments and to relations arising during exercise of control over customs payments, the appeal against the acts of customs bodies, actions and(or) inaction of their officials and bringing to responsibility guilty persons unless otherwise provided by this Code.

2. This Code shall apply to relations involving establishment, introduction and collection of fees in the cases specified in the legislation on taxes and fees.

Article 3. Basic principles of the legislation on taxes and fees

1. Basic principles of the legislation on taxes and fees shall be determined by this Code.

2. Legislation on taxes and fees shall be based on the principles of obligation to pay taxes and fees, unambiguity, fair taxation, unity of the tax system, stability and openness of the legislation on taxes and fees.

3. The provisions of the legislation on taxes and fees may not contradict the principles established by this Code.

4. Each person must pay taxes and fees established by the legislation on taxes and fees.

5. Taxes and fees must have an economic ground and may not be arbitrary.

6. Nation-wide taxes and fees shall be imposed, amended or revoked by this Code.

7. Local taxes and fees, within the authorities of the Local Keneshs contemplated by this Code, shall be imposed, amended, introduced or revoked by the normative legal acts of the Local Keneshs on taxes and fees, in accordance with this Code.

8. No local taxes and(or) fees may be imposed which are not provided for by this Code

9. No one may be charged with an obligation to make contributions and payments having characteristics of taxes and fees as defined by this Code, which are not provided by this Code or are imposed in a way different from the one contemplated by this Code.

10. When introducing taxes and fees, other than taxes collected by the customs bodies, all the elements of taxation and imposition of fees must be defined, unless otherwise provided in this Code.

11. It is prohibited to include in the legislation other than the legislation on taxes and fees the norms regulating tax relations, except for the cases contemplated by this Code.

12. In the event of contradiction between this Code and other legislative acts of the Kyrgyz Republic the norms of this Code shall apply for purposes of taxation.

13. Where contradictions are present in the legislation on taxes and fees, these contradictions shall be interpreted by the tax service bodies and(or) judicial bodies in favor of the taxpayer. For purposes of this Part, contradictions of the legislation on taxes and fees shall mean two or more provisions conflicting with one another, and preventing the taxpayer from unambiguous determination and(or) fulfillment of the obligations contemplated by the legislation on taxes and fees.

Article 4. Principle of obligatory nature of taxation

The taxpayer shall be required to fulfill tax obligations, pursuant to the legislation on tax and fees, in full and by the due date.

Article 5. Principle of clear definition of taxation

Taxes and (or) fees must be definite. A clear definition of taxation and (or) imposition of fees means the possibility of identifying in the legislation on taxes and fees of all the grounds and the procedure by which the taxpayer’s tax obligations arise, are fulfilled, and are discharged.

Article 6. Principle of fair taxation

1. Taxation in the Kyrgyz Republic shall be universal and compulsory.

2. Granting tax concessions of an individual nature shall be prohibited.

3. Taxes and fees may not be discriminatory and may not apply differently depending on social, racial, national, religious and other similar criteria.

Article 7. Principle of a single tax system

The tax system of the Kyrgyz Republic shall be a single system throughout the entire territory of the Kyrgyz Republic in respect of all the taxpayers.

Herewith, no taxes and fees may be established that restrict free movement of the goods, works, services, or financial resources within the customs territory of the Kyrgyz Republic.

Article 8. Principle of publicity of the legislation on taxes and fees

The normative legal acts regulating tax relations shall be subject to mandatory publication in the manner prescribed by the legislation of the Kyrgyz Republic.

Article 9. Principle of presumption of taxpayer’s good faith

When performing tax control by tax authorities or other authorized state bodies, the principle of presumption of the taxpayer’s compliance with the tax laws shall apply, which means that a business entity is considered to be operating in good faith, until this fact is disproved by the tax authorities based on the documented evidence pursuant to the procedure contemplated by the legislation on taxes and fees.

Article 10. Making amendments and additions to legislation on taxes and fees

Proposed amendments to legislation on taxes and fees may not be considered by the Government of the

Kyrgyz Republic until preliminary expert assessment is made by the Ministry of Economy and Finance of the Kyrgyz Republic.

2. Proposed legislative acts on taxes and fees, imposing or canceling taxes and (or) fees, granting tax

exemptions, and (or) contemplating reduction of the budget revenues may only be submitted to the Jogorku Kenesh of the Kyrgyz Republic and passed with the consent of the Government of the Kyrgyz Republic.

Article 11. Clarifications on application of the norms of the legislation on taxes and fees

1. Ministry of Economy and Finance of the Kyrgyz Republic shall provide written responses to queries concerning application of the norms of legislation on taxes and fees.

2. Responses given by the Ministry of Economy and Finance pursuant to Part 1 of this Article shall be mandatory for the authorized and other government bodies.

Article 12. Normative legal acts of the government bodies and administrative-executive bodies of the local self-governments

1. In the cases contemplated by legislation on taxes and fees, government bodies and administrative-executive bodies of the local self-governments shall issue normative legal acts on the issues related to taxation and fees.

2. Ministry of Economy and Finance of the Kyrgyz Republic, an Authorized Government Body shall issue normative legal acts in the form of instructions, regulations, and other methodical directives on application of the present Code.

3. Instructions shall be approved by the Government of the Kyrgyz Republic.

Article 13. Validity of legislative acts on taxes and fees

1. Legislative acts on taxes and fees shall take effect on the date indicated in such act or in the normative legal act on its enactment. In the absence of such specification, legislative acts on taxes and fees shall take effect upon expiration of 15 calendar days from the date of their official publication, unless otherwise provided in this Code.

2. Legislative acts making amendments to this Code with regard to establishing new taxes and (or) fees, increasing rates of taxes and (or) fees, and normative legal acts of the Local Keneshs introducing taxes and (or) fees and increasing their rates, shall come into force from the first day of the subsequent tax period, but not earlier than after 2 months of their official publication.

3. Normative legal acts establishing new taxes and(or) fees, increasing the rates of taxes and(or) fees, establishing or increasing taxpayers' responsibility, or worsening their position otherwise, shall have no retroactive power.

Article 14. Inconsistency between the legal normative acts on taxes and fees and this Code

1. Provisions of the normative legal acts, adopted on the basis and in accordance therewith, or their specific provisions may not conflict with the provisions of this Code. Where such contradiction and (or) inconsistency exists, provisions of this Code shall apply.

2. A normative legal act on taxes and fees or its specific provisions shall be considered at variance with this Code if such an act:

1) is issued by the body not authorized under this Code to issue acts of such type or is issued in violation of the procedure established by the legislation .

2) revokes or restricts the rights of the taxpayers, tax agents, their representatives or the powers of the tax authorities, customs bodies established by this Code;

3) changes the content of obligations, grounds, conditions, order or procedure of actions of the parties to tax legal relations as determined by this Code;

4) prohibits actions of the taxpayers, tax agents, and their representatives allowed by this Code;

5) prohibits actions of the tax authorities, customs authorities, their officials allowed or prescribed by this Code;

6) allows or admits actions prohibited by this Code;

7) changes the content of the concepts and terms defined in this Code, or uses these concepts and terms in the meaning different from that used in this Code;

3. A normative legal act on taxes and fees or some of its provisions shall be considered inconsistent with this Code in the presence of at least one of the circumstances specified in Item 2 of this Article.

4. Recognition of a normative legal act or some of its provisions as inconsistent with the present Code shall be effected through legal proceedings, unless otherwise provided in this Code. The government bodies or executive-administrative bodies of the local self-government which have adopted the said act or their higher bodies shall have the right to repeal this act or introduce necessary amendments prior to its juridical examination.

Article 15. Procedure for reckoning time limits established by the legislation on taxes and fees

1. The running of a deadline reckoned in terms of years, months, or days begins on the next day after a calendar date or the commencement of the event, which determines its beginning.

2. A time limit reckoned in terms of years expires in the corresponding month and on the day of the last year of the period. The period consisting of 12 calendar months succeeding in a row shall be recognized as a year.

3. A time limit reckoned in terms of months expires in the corresponding month and on the day of the last month of the period. A calendar month shall be deemed to be a month.

4. In case of time limits reckoned in years or months, if the deadline falls on the month in which there is no corresponding day, the deadline expires on the last day of this month.

5. When the last day of the period falls on a day off, the next following working day shall be deemed to be the deadline.

6. An action for which a time-limit is established may be performed by the close of business on the last day of the time-limit.

Article 16. Effect of international treaties and/or other acts of the Kyrgyz Republic

If an international treaty or other act to which the Kyrgyz Republic is a party, ratified by the President of the Kyrgyz Republic or the Jogorku Kenesh of the Kyrgyz Republic and adopted in the manner prescribed by the laws of the Kyrgyz Republic, establishes rules and norms different from those provided by this Code and other normative legal acts on taxes and(or) fees adopted herewith, the rules and norms of that international treaty or an act shall apply.

Article 17. Parties to tax legal relations regulated by the legislation on taxes and fees and Financial Police Services

1. Parties to tax legal relations shall be:

1) organizations and individuals recognized as taxpayers under this Code;

2) organizations and individuals recognized as tax agents under this Code;

3) Ministry of Economy and Finance of the Kyrgyz Republic;

4) authorized government agency, tax and customs services;

5) Central Treasury of the Ministry of Economy and Finance of the Kyrgyz Republic and its agencies - dealing with the issues of transfer of taxes and fees to the budget, credit and refund of the overpaid taxes and fees;

6) government agencies and administrative-executive units of the local self-government, other agencies and officials authorized by them, receiving and collecting taxes and(or) fees and also controlling their payments, other than tax and customs services, in accordance with the established procedure(hereinafter referred to as the bodies collecting taxes);

7) State Agency for Mineral Use

2. Financial Police Agency under the Ministry of Economy and Finance of the Kyrgyz Republic shall carry out an operative and investigating activity, hold an inquiry and preliminary investigation connected with tax offences following the procedure contemplated by the laws of the Kyrgyz Republic and shall provide physical protection of the Tax Service officials performing their duties during tax control.

Article 18. Concept of a tax and fee

1. Tax means an obligatory, individual non-refundable money payment collected from organizations and individuals to the budget under the legislation on taxes and fees.

2. Fee means an obligatory money contribution collected from organizations and individuals under the legislation on taxes and fees, whose payment is one of the conditions of the legally significant actions taken in respect of the payers of fees by government authorities, local self-government bodies or other bodies and officials authorized by them, including granting of specific rights or issuance of permits and (or)licenses.

Article 19. Institutions, terms and concepts used in this Code

1. Institutions, concepts and terms of the civil law, family law, customs law and other fields of legislation of the Kyrgyz Republic used in this Code shall apply in the meaning in which they are used in these fields of legislation unless otherwise provided in this Code.

2. The following concepts shall be used in this Code:

1) "Agent" means an organization or an individual, carrying out the activity under the contracts of agency, commission, transport expedition, or an agent contract, and receiving remuneration from a subject for the rendered service, except for an employee working under the contract concluded in accordance with the Labor Code of the Kyrgyz Republic.

2) “Assets” mean an accounting category determined in accordance with the legislation of the Kyrgyz Republic on accounting.

3) “Bad debt” means an amount due to a taxable person, which can not be received by this person in full due to termination of liability based on court decision, bankruptcy, liquidation or death of a debtor, or when the limitation term contemplated by the civil legislation of the Kyrgyz Republic expired.

4) "Budget" means the republican budget and the local budgets of the Kyrgyz Republic;

5) "Bank" means a commercial bank, a specialized financial - credit or credit institution or organization having a license or a certificate of the National Bank of the Kyrgyz Republic;

6) “Charitable organization" means a not-for-profit organization:

(1) created and engaged in charitable activity in accordance with the legislation on not-for-profit organizations and charitable activity;

(2) not engaged in the production and (or) sale of excisable goods or gambling business;

(3) not engaged in the support of political parties or candidates for elected office;

(4) received in the established manner the document issued by the tax bodies, and confirming its entitlement to tax benefits under this Code.

7) “Close relatives” mean the persons engaged in matrimonial relations in accordance with the family legislation of the Kyrgyz Republic, guardians and trustees, and parents, children, brothers, sisters and cousins, a grandfather, a grandmother, grandchildren.

8) “Winnings” mean any kinds of payments, prizes, and other incomes in cash or in kind received by taxpayers in lotteries, contests, competitions, Olympiads, festivals, and other similar events.

9) "Gross income" means the total amount of income determined in accordance with Chapters 28 and 34 of this Code;

10) "Membership fees" mean assets contributed by the persons entering a membership-based non-profit organization, in the amount and following the procedure contemplated by the constituent documents of this organization provided that such transfer will not be conditioned by the cross-provision of , works, services to a member of this organization for free or at the price lower than the cost price.

11) “Grant” means assets transferred gratis by the states, international, foreign and domestic organizations to the Government of the Kyrgyz Republic, local self-governance bodies, state organizations and non-profit organizations which do not pursue political goals.

12) “Humanitarian aid” means assets transferred on a gratis basis by the states, international, foreign and domestic organizations to the Government of the Kyrgyz Republic, local self-governance bodies, state organizations, and non-profit organizations, as well as to needy individuals, in the form of foods, technology, equipment, outfit, medical supplies and drugs, other property to improve livelihoods of the population, as well as to prevent and liquidate emergency situations of military, environmental and man-caused character, under the condition of their further consumption and (or) gratuitous distribution.

13) "State Register of Taxpayers of the Kyrgyz Republic" is a system of the state database on taxpayers' registration kept by an Authorized State Body for purposes of monitoring the accuracy and timelines of payment of taxes and fees.

14) "Geologic preparation of a deposit" means a set of searching and assessing and exploring works, including computation and geologic and economic assessment of the deposit stocks by industrial categories;

15) "Permanent mining works" means a set of mining and construction works ensuring the opening and preparation for the field development or the part of it.

(1) Should it be the quarry operation, the mining and capital works shall include:

a) holding and equipping of the opened (permanent trenches) and split (working trenches) excavations;

b) removal of rocks (permanent stripping), covering and bearing mineral deposits to the waste mounds at the moment the mine is put into commission;

c) works on drilling and equipping the unwatering bore holes, construction of the underground drainage drifts and others.

During the permanent mining works, the stocks of mineral deposits that guarantee achievement of the planned capacity within 4-6 months of the mine working shall be opened and prepared for the development. Should the deposits be at a greater depth, the permanent mining works shall include the works that are necessary to be performed for achieving at least 15% of the planned production capacity of the mine.

Should it be the underground development, permanent mining works shall include: construction and equipping of the bore holes, galleries and the adjacent bords, deepening of the holes, construction and equipping of the bords and excavation of the shaft bottom; holding and equipping of the main permanent mines (crosscuts, intake entries and air drifts, slopes, inclines, ore passes and others). When constructing a new mining enterprise, the volume of the permanent mining works shall be predetermined by providing its full planned production capacity or the capacity of its certain stage (should a new mining enterprise be put into commission stepwise).

16) "Preparatory mining works" means a set of the mining and construction works on modern reproduction of mineral extraction at the mines and quarries, protection from gas-dynamic developments, including coal bursts, rock outbursts and gas kicks, rock bumps, and supplementary exploration of the developing stocks. The main content of the preparatory mining works is holding preparatory mine works, delimitating the excavation grounds of the mining enterprise.

17) “A mining enterprise” is an enterprise exploring a mineral deposit.

18) “Dividend” means a part of the profit of an organization, including increment of value during its liquidation, received by a person in the form of income from the owned shares , or any other payment made in accordance with the person’s share in the capital.

19) “Documented expenses” mean expenses supported by the documents containing the requisites, whose list is established by the KR Ministry of Economy and Finance, allowing to determine the size of a deal, nature of a deal and identify its participants.

20) "An official of the Tax Service body" is a tax service official authorized to perform his functions in accordance with this Code.

21) "Taxpayer's identification tax number" means a number assigned to the taxpayer upon his tax registration as the taxpayer.

22) "Individual entrepreneur" means:

(1) a resident physical person registered following the established procedure and engaged in entrepreneurial activity without establishing an organization, including private notary, attorney, private guardsman, private detective, and a physical person engaged in entrepreneurial activity without establishing an organization, not registered as an individual entrepreneur, but required to fulfill liabilities established by this Code;

(2) a non-resident physical person carrying out its activity through a permanent establishment in the Kyrgyz Republic.

23) «Property» means all objects of civil rights, related to property in accordance with the Civil Code of the Kyrgyz Republic, including intangible assets;

24) “Dependent” is a the taxpayer’s close relative living on his (taxpayer’s) earnings, having no income or earning income which is less than 650 soms per month.

25) "Indirect taxes" mean taxes on goods, works and services, imposed as an extra charge added to the price or tariff, not connected directly with the taxpayer's income or property, such as the value-added tax (hereinafter referred to as the VAT), excise tax, tax on sales and services rendered to physical persons, and other taxes contemplated by this Code as indirect taxes.

26) “Lottery activity” means the activity of the subjects on organization of the group or mass game, during which a lottery organizer holds a drawing of the prize fund amongst the lottery participants – holders of lottery tickets, in accordance with the legislation of the Kyrgyz Republic. The winning shall not depend on the will and actions of the subjects of lottery activity. The lottery activity shall also include organization of pari mutuel and system games.

27) "Taxpayer's Personal Account" means an account opened by the tax body in respect of an organization and an individual who is the taxpayer, on which the accounting of accrued and paid tax amounts, interests, penalties and tax sanctions of the taxpayer is kept.

28) "A person" means an organization and (or) a physical person.

29) “License for subsurface use” is a document entitling to the usage of subsurface site issued by the governmental body on subsurface use in accordance with the legislation on subsurface.

30) “License agreement on subsurface use” is an agreement between the governmental body on subsurface use and the licensee about conditions of subsurface use, including the information about the quantity and quality of the accounted stocks of minerals at the subsurface site, the volumes of quoted mineral extraction, issues of distribution of produce and measures of technical and ecological safety when using subsurface. The license agreement authorizing subsurface use shall be an integral part of the license for the right to subsurface use.

31) “International organization” is a subject of international law, established under an agreement between the states or the governments of the states.

32) "Place of location of a domestic organization" means the legal address of a domestic organization.

33) "Place of residence of a physical person" means the place of the residence registration of a physical person.

34) "Excise tax stamp" means a stamp of the approved format which is attached on a pack, bottle or on other container, in which the excisable produce is sold, thus showing that the excise tax has been paid.

35) "Tax sanction" means a measure of responsibility established by this Code for committing tax offence.

36) "Tax debt" means the amount of arrears, as well as unpaid amounts of interests, penalties and tax sanctions.

37) "Arrears" mean the amount of tax or the amount of fee not paid by the deadline established by the legislation on taxes and fees.

38) "Force majoure" means the emergence of extraordinary and inevitable circumstances resulted from natural disasters, such as earthquakes, floods or any other circumstances which are impossible to predict or prevent, or it is possible to predict them, but impossible to prevent.

39) “Tax debt recognized by the taxpayer” means the due tax debt indicated by the taxpayer in tax reports and reflected in personal accounts, as well as the amount of tax accrued based on the tax audit report, which is not contested by the taxpayer under Article 141 of this Code, or if an effective court decision on its payment is available.

40) “Employer” means an organization, including a foreign organization or an individual entrepreneur engaged with a worker in relationships regulated by the labor legislation of the Kyrgyz Republic, legislation of the Kyrgyz Republic on public service, and a physical person holding an executive position in the organization.

41) “Intangible assets” mean the objects of immaterial property, such as patent, license, trade mark, ability to generate profit, copyright or agreement on the use of the name and the trade mark of a company, computer software, etc. that can be used in the economic activity for at least one year. The cost of an intangible asset is determined in accordance with the legislation of the Kyrgyz Republic on accounting.

42) “Non-profit organization” means an organization which meets the following requirements:

(1) this organization is registered in an organizational and legal form established by the legislation of the Kyrgyz Republic for non-profit organizations;

2) this organization does not consider deriving income as the principal goal of its activity and distributes no derived income amongst its members, founders and its officials.

43) "Tax registration of the taxpayer" means entering data about the taxpayer into the State Register of Taxpayers of the Kyrgyz Republic.

44) "Organization" means:

(1) a legal person created in accordance with the civil legislation of the Kyrgyz Republic (hereinafter referred to as a domestic organization);

(2) a corporation, a company, a firm, a fund, an institution, or another establishment created under the legislation of a foreign country, or an international organization (hereinafter referred to as a foreign organization);

45) "A separate subdivision of an organization" means any subdivision territorially separated from the organization, whose characteristic feature is a separate property and (or) in the place of whose location permanent places of employment are equipped. A separate subdivision of the organization is recognized as such, regardless of the fact whether its creation is reflected or not reflected in the organization's constituent or their organizational-administrative documents, and regardless of the powers vested in the said subdivision.

46) "a fixed asset" means the asset used or meant for the use in the economic activity, and which gradually transfers its value onto the produced goods, works, and services; period of use or exploitation of that asset is more than one year and its value exceeds 10000 soms, or for purposes of Article 264 of this Code, its customs value should be no less than 100000 soms, including the land, unless otherwise provided in this Code.

47) “Principal workplace” means the place of work on which an employer keeps or must keep a work-book registered in accordance with the labor legislation of the Kyrgyz Republic.

48) “Taxable supplies” mean supplies of goods in the territory of the Kyrgyz Republic, supplies of works and services in the Kyrgyz Republic made for payment; exports of goods, works and services made by a taxable subject, other than supplies exempt from the VAT under Article 232 of this Code.

49) “Taxable import” means importation of goods to the customs territory of the Kyrgyz Republic, except for importation of the goods exempt from the VAT.

50) "Payment” includes all types of payments to a supplier made directly or indirectly by a consumer or by another person for supplies paid or payable in full or partially, in kind or in a monetary form.

51) "Fixed assets of the mining and (or) mining-processing enterprises" mean produced and (or) purchased property contemplated by the technical project and (or) feasibility report of these enterprises, including:

(1) held and equipped permanent and preparatory mining works (mine bore holes, galleries, cross-cuts, main intake entries and air drifts, slopes and inclines, underground bords of central and district dewatering, energy supply and ventilation, technological mainline roads of the mines, permanent stripping, opened and split trenches and other permanent and preparatory mining works providing access, opening and preparation of the deposit stocks, mining equipment, technological equipment, motor transport, other than light cars);

(2) mining and transport machines, technological equipment for the field development and processing mineral raw material, and other equipment of the main and support function;

(3) buildings and constructions of the main and support function;

(4) transport ways

52) “Permanent establishment” means a permanent place of activity, through which a foreign organization or a non-resident physical person (hereinafter referred to as a non-resident) carries on economic activity fully or in part.

(1) The concept of "permanent establishment", particularly, includes:

a) place of management;

b) branch office;

c) work office;

d) factory;

e) workshop;

f) mine, oil or gas well, quarry or any other place of extracting natural resources;

g) agricultural, pasture or forest property;

h) construction area or construction, installation or assembling object or services, connected with the controlling activity over execution of these works, if only this type of object or area exists for 183 or more days or these services are rendered for 183 or more days during any 12-months period.

i) installations or other objects used for exploration of natural resources, or performing controlling activity connected with these objects, or a drilling rig or a vessel used for the purposes of exploration of natural resources, provided that such use lasts for 183 or more days or such services are rendered for 183 or more days during any of 12-months period;

j) providing services, including consulting services by a non-resident performed through the personnel hired by this non-resident if the personnel carries out such activity in the territory of the Kyrgyz Republic for 183 and more days.

(2) The concept of "permanent establishment" does not include:

a) use of constructions solely for the purpose of storage, display or delivery of goods owned by a non-resident;

b) maintenance of the stock of goods owned by a non-resident solely for purposes of storage, display or delivery;

c) maintenance of the stock of goods owned by a non-resident solely for purposes of processing by another organization or an individual;

d) maintenance of the permanent place of activity solely for purposes of purchase of goods, or collection of the information for a non-resident;

e) maintenance of the permanent place of activity solely for purposes of carrying out any other activity of preliminary or incidental nature for a non-resident;

f) maintenance of the permanent place of activity solely for the purpose of carrying out any combination of activities enlisted in items a)-e), provided that the aggregate activity of the permanent place arising from such combination is of preliminary or incidental nature;

g) carrying out economic activity in the Kyrgyz Republic through an agent, providing these persons act within the framework of their regular activity.

(3) The fact that a foreign organization controls or is controlled by a domestic organization or a resident physical person does not mean the creation of a permanent establishment.

53) “Acquired material resources” mean fixed assets, goods, including raw materials, fuel, furnishing products, as well as executed works and rendered services received or imported by a taxable subject for purposes of making supplies.

54) Interest income” means income from any kinds of debt claims including the income from bonds, promissory notes, and other forms of lending, as well as the income received under financial lease agreement .

55) “ Re-insurer” means an insurer who transfers a portion of undertaken obligations to another insurer for purposes of reducing, preventing possible accumulation of risk, creation of balanced insurance portfolio, and ensuring financial stability of insurance transactions.

56) “Re-insurer” means an insurer undertaking a certain portion of obligations of another insurer.

57) "Mineral resources" mean subsurface mineral resources, hydrocarbon and underground waters whose chemical composition and physical properties allow their use in the sphere of material production and consumption.

58) "Processing of minerals" means a set of works aimed at production of marketable products out of minerals.

59) "Primary marketable product" may include the following:

(1) minerals:

a) oil, natural gas and condensed gas;

b) coal and shale oils;

c) marketable ore;

d) raw material for the production of construction materials;

e) mica;

f) asbestos;

g) non-metallic minerals for the cement and metallurgy industries;

h) underground fresh and mineral waters;

i) precious metals, chemically pure metals in sands, ores, concentrates;

(2) concentrates of ferrous, non-ferrous and radioactive metals, mining minerals;

(3) precious stones, semiprecious stones and piezooptic minerals undergone primary processing;

(4) with regard to other minerals - minerals undergone primary processing;

60) “Field development” means a complex of mining works on opening-up, preparation and extraction of mineral resources.

61) “Royalty” means any kinds of payment received as a premium for:

(1) the use or according the right to use copyright on any works of literature, arts, or science, including computer software, cine-, tele-, video-films or records for radio and television;

(2) any patent confirming the right to the object of industrial property, trade mark, design or model, plan, secret formula or process, or to the information (know-how) related to industrial, commercial or scientific experience.

For purposes of Section XIII of this Code, "royalty" means current payments for subsurface use paid by subsurface users during commercial field development.

62) "Sale of goods, works, services" means the transfer on a paid basis, including exchange of goods, works, services,right of ownership of the goods, results of works performed by one person for another person, chargeable provision of services by one person to another; and in the cases contemplated by this Code transfer of the ownership of goods, results of works performed by one person for another person, and provision of services by one person to another person on a gratis basis.

63) «Work, service» means any activity which is not a sale of goods.

64) "Registration recording" means registration of the taxpayer resulting in fixing the taxpayer's registration data, including taxpayer's place of stay, ownership of objects of taxation, registration of current changes of the taxpayer's registration data; removal from the registration by the tax body.

65) "Taxpayer's registration data" means the data reported to the tax body by the taxpayer upon his state registration and (or) registration recording.

66) "Taxpayer's certificate" is a high security document on assigning an identification tax number, issued to the taxpayer upon his registration in the State Register of Taxpayers of the Kyrgyz Republic.

67) “Insurance premium(contribution)” means the amount paid by an insurant to an insurer for undertaking obligations to pay the insurance compensation (insurance money) when the insurance case determined in the insurance contract arises. The amount is contributed by an insurant as a one-time payment (insurance premium) or in installments (insurance contributions) on a monthly, quarterly, etc., basis during the period of validity of the insurance contract.

68) “Insurance case” means an event upon occurrence of which an insurer has to pay the insurance amount (compensation) by virtue of the law or an agreement..

69) “Insurance money (compensation) means a partial or full compensation of the damage within the insurance limits on the insurance cases with the insured, third parties, or their property , which is paid out by an insurance organization.

70) "Insurer" means a domestic organization, having in accordance with the legislation of the Kyrgyz Republic a license permitting to carry out the insurance activity of the given type, which following the concluded insurance contract (policy of insurance) undertakes an obligation to reimburse the damage incurred by an insurant or the third person upon occurrence of the insurance case determined in the insurance contract.

71) "Insurant" means an individual or an organization, having interest in the object of insurance, concluded a contract with an insurer for the purpose of insuring interest of his own or the third person (beneficiary) and paying to an insurer the premium (insurance premium) for the commitment to reimburse the damage upon occurrence of the insurance case determined in the insurance contract (policy of insurance).

72) “Subsidy” means the aid provided by the Government of the Kyrgyz Republic, the Jogorku Kenesh of the Kyrgyz Republic and the Local Keneshs of the Kyrgyz Republic in the form of transfer of assets to the taxpayer in exchange for the past or future fulfillment of certain conditions related to his economic activity.

73) “Agricultural producers” mean organizations and individuals producing agricultural products, including their own agricultural processed products, provided the earnings from the sale of these products , works, services shall make no less than 75% of the total volume of sale of goods, , works, services.

74) "Agricultural commodity-service cooperatives" mean cooperative societies in which at least 75% of the members are agricultural producers and at least 75% of earnings come from realization of goods, works, and services produced by the members of this cooperative society - agricultural producers.

75) “A subject” means any person or other type of formation, a state body carrying out the economic activity regardless of their organizational and legal forms, types of activities, affiliation and forms of ownership.

76) "A subject of small entrepreneurship" means organizations and individuals registered with the tax service bodies in accordance with the established procedure and carrying out the entrepreneurial activity, whose gross income for a year does not exceed the VAT registration threshold.

77) "Account" means the settlement and another account with the bank, on which the pecuniary funds of an organization and an individual entrepreneur are placed and from which they may be spent.

78) “Questionable obligation” means the amount which should have been paid by the person but was not paid due to discharge of obligations upon court decision, as a result of bankruptcy, liquidation or demise of a creditor, or upon expiry of the statute of limitations contemplated by the civil legislation of the Kyrgyz Republic.

79) «Goods» mean any property which is the product of economic activity and an object of realization. For purposes of regulation of relationships connected with the transfer the goods across the customs border, the goods also include the assets determined by the Customs Code of the Kyrgyz Republic. For purposes of the VAT, goods include all tangible assets.

80) “Customs Legislation of the Kyrgyz Republic” means the Customs Code of the Kyrgyz Republic and normative acts adopted in pursuance of the Customs Code.

81) "Labor legislation of the Kyrgyz Republic" means the Labor Code of the Kyrgyz Republic and the normative legal acts adopted in pursuance of the Labor Code.

82) "Authorized government body" means a government agency of the Kyrgyz Republic authorized to exercise control over fulfillment of the tax obligations before the State and perform management over the tax service bodies.

83) "Physical person" means a citizen of the Kyrgyz Republic, a foreign citizen and a stateless person.

84) “Resident physical person” means any physical person, staying in the Kyrgyz Republic for at least 183 and more days during any 12-months period, or who is employed in the public service of the Kyrgyz Republic abroad.

85) “Non-resident physical person” means any physical person, who is not considered a resident physical person under this Code.

86) “Financial lease” means a special type of lease relations on transfer of the fixed assets under a financial lease contract concluded in accordance with the procedure established by the civil legislation of the Kyrgyz Republic and required to meet one of the following conditions:

(1) upon expiry of a lease contract, an object of leasing shall be transferred to the ownership of a

lessee;

(2) a lease contract contemplates the right to redeem an object of leasing by a lessee upon expiry of

a lease contract at the price which is indicated by a lessor in the lease contract ;

(3) period of a lease contract ishall be more than three quarters of the period of economic service of a lease object (in this particular case, it is not mandatory to transfer the right of ownership)

(4) amount of lease payments estimated at a market rate should be at least 90% of the value of a lease object;

(5) a lease object is a capital asset and is of a special nature, therefore, only a lessee may use it with no significant modifications.

The value of capital assets transferred and(or) received under financial lease shall be determined as of the moment of conclusion of a financial lease agreement.

For purposes of taxation, financial lease shall be treated as the purchase of capital assets by a lessee. This being the case, a lessee shall be considered the owner of capital assets, while lease payments shall be considered payments on a credit issued to a lessee.

87) "Members of unions and associations of the peasants' and farmers' societies and other agricultural formations" mean the physical persons entering these formations with the property share, including land plots, in accordance with the legislation of the Kyrgyz Republic.

88) "Membership fees" mean assets contributed by the persons who belong to a membership-based non-profit organization, in the amount and following the procedure contemplated in the constituent documents of the organization, provided that such transfer is not conditioned by cross-provision of goods, works, and services to a member of this organization for free or at a price lower than the cost price.

89) "Electronic digital signature of the taxpayer" is a succession of electronic digital symbols, created by an electronic digital signature and confirming authenticity of an electronic document, its affiliation with the taxpayer and invariability of its content.

90) "Electronic document of the taxpayer" means an electronic document submitted in an established format, and confirmed by the taxpayer's electronic digital signature.

91) “Export of works and services” means supply of works and services performed and rendered by a taxable subject in the event that the place of supply of works and services under Article 230 of this Code is outside the territory of the Kyrgyz Republic.

92) "Economic activity" means entrepreneurial and other type of activity aimed at deriving income, profit or compensation regardless of the results of such activity.

"Entrepreneurial activity" means an independent and economic activity of organizations and physical persons carried out under their own name at the expense of their own or the borrowed funds, at their own risk and on their own property responsibility aimed at generation of income .

An economic activity incidental to sale, transfer or lease of assets shall be recognized as an entrepreneurial activity, if at least one of the following conditions is observed:

(1) activity is carried out on a regular basis and is a usual type of activity for a person engaged in the above-listed operations;

(2) when carrying on the activity, the goods are supplied, works performed or services rendered;.

"Other activity" means the economic activity, and includes:

(1) activity carried out by an individual in accordance with the labor legislation of the Kyrgyz Republic;

(2) depositing money resources with the banks or any other credit institutions;

(3) purchase, sale of the shares or securities against the joint stock of an enterprise allowed for the issuance;

(4) purchase, sale of the bonds or other debt instruments;

(5) purchase, sale of the shares in investment funds;

(6) other activity which is not an entrepreneurial activity.

93) "Economic (balance) stocks" mean stocks of subsurface minerals whose extraction and processing into marketable products, given the current level of prices and industrial technologies, is economically acceptable for an investor.

94. “Large taxpayer” is the taxpayer that meets the criteria established by an authorized state agency.

3. Concepts of a «taxpayer», «object of taxation», «tax base», «tax period» and other specific concepts and terms of the legislation on taxes and fees shall be used in the meanings determined in the corresponding sections of this Code.

Chapter 2. System of taxes and fees in the Kyrgyz Republic

Article 20. Types of taxes and fees in the Kyrgyz Republic

1. The following types of taxes and fees shall be imposed in the Kyrgyz Republic: national taxes and fees and local taxes and fees.

2. National taxes and fees shall be recognized as taxes and fees established by this Code and payable in a compulsory way throughout the territory of the Kyrgyz Republic.

3. Local taxes and(or) fees shall be recognized as taxes and fees established and introduced pursuant to this Code through the normative legal acts passed by the Local Keneshs and subject to compulsory payment in the territories of respective territorial and administrative units.

Article 21. National taxes and fees

National taxes and fees shall include:

1) Personal Income Tax;

2) Profit Tax;

3) Value Added Tax;

4) Excise tax;

5) Land tax;

6) Mineral tax;

7) Road tax;

8) Contributions to the Fund for Prevention and Liquidation of Emergency Situations;

9) Tax payable by the owners of vehicles;

10) Real property tax;

11) Tax on sales and on services provided to physical persons.

Article 22. Local taxes and fees

Local taxes and fees shall include:

1) Tax on advertising;

2) Tax for garbage removal;

3) Hotel tax;

4) Fee for parking.

Article 23. Information on local taxes and fees

Information and copies of the adopted normative legal acts concerning introduction, change and repeal of the local taxes and fees shall be sent by the administrative and executive units of the local self-government to respective regional tax authorities.

Article 24. General conditions of imposing taxes and fees

1. Tax shall only be considered imposed if the taxpayers and the elements of taxation are defined in the legislation on taxes and fees, namely:

1) object of taxation;

2) tax base;

3) tax rate;

4) tax period;

5) procedure for computation of tax;

6) procedure and deadlines for tax payment.

2. In the cases contemplated by this Code, with the introduction of the tax, a legislative act on taxes and fees may also provide tax preferences and grounds for using them by the taxpayer.

3. Fee shall only be considered imposed, if the payers of the fee and the elements of the fee are defined in the legislation on taxes and fees, namely:

1) object of imposing fee;

2) base of imposing fee;

3) rate of fee;

4) period for imposed fee ;

5) procedure for computation of fee;

6) procedure and deadlines for payment of fee;

4. With the introduction of fee, a legislative act on taxes and fees may also provide if necessary fee benefits and grounds for using them by the payer of fees.

Article 25. Special tax regimes

1. Special tax regime shall be recognized as a special procedure for calculation and payment of taxes and fees, applied in the cases and in the order established by this Code and adopted pursuant to the legislative acts on taxes and fees.

2. With the introduction of special tax regimes, taxpayers, elements of taxation, elements of fees, tax benefits and (or) specific features of taxation shall be determined in the manner established by this Code.

3. Special tax regimes shall include:

1) tax on imputed income

2) simplified system of taxation for small businesses;

3) taxation in the Free Economic Zones (hereinafter in this Code referred to as the FEZ);

4) tax contract.

SECTION II. TAXPAYERS AND PAYERS OF FEES. TAX AGENTS. REPRESENTATION IN TAX RELATIONS

Chapter 3. Taxpayers and payers of fees. Tax agents.

Article 26. Taxpayers and payers of fees

The persons obliged under this Code to pay taxes and/or fees, including the persons taxable at the source under this Code, shall be recognized as taxpayers and payers of fees (hereinafter referred to as "taxpayers").

Article 27. Related persons

1. For purposes of taxation, the persons whose relations may influence the conditions or economic results of their activity or activity of the persons they represent shall be recognized as related persons, in particular, when:

1) a person directly and/or indirectly participates in an organization, and the total share of such participation exceeds 20 per cent;

2) two organizations, where a third person participates with the direct and (or) indirect share of participation exceeding 20 per cent in each organization, or if control is performed by that person ;

3) an individual is subordinate to another individual as to his or her superior;

4) persons having relations regulated by the labor legislation of the Kyrgyz Republic;

5) close relatives;

6) a founder and a trustee.

2. The Court may recognize the persons as related on other grounds different from those contemplated by Part 1 of this Article, if the relations between these persons may influence the results of transactions between them.

3. For purposes of Part 1 of this Article, the share of indirect participation of one person in the organization through the chain of other organizations shall be determined as the product of the corresponding shares of participation.

Article 28. Tax agents

The persons required under this Code to calculate, withhold taxes from the taxpayer, and remit taxes to the budget shall be recognized as tax agents.

Article 29. Rights of the taxpayers

1. Taxpayers shall have the right to:

1) receive from the tax service bodies the information about current taxes and fees, amendments in the tax legislation;

2) represent their interests on the issues of tax relations in person or via their representative;

3) receive results of tax control;

4) provide explanations to the Tax Service bodies on the results of tax control;

5) receive a statement from the personal account regarding the status of settlements with the budget related to fulfillment of tax obligations;

6) appeal against normative legal acts and other acts of the Tax Service, decisions [V1] and actions and (or) inaction of the Tax Service officials in accordance with the established procedure;

7) require keeping a tax secret;

8) provide no information and documents that are not related to taxation and fees.

2. The taxpayer shall have other rights contemplated by the legislation on taxes and fees.

Article 30. Guarantee and Protection of the Taxpayers' Rights

1. Taxpayers shall be guaranteed an administrative and judicial protection of their rights and legitimate interests.

The procedure for protection of taxpayers’ rights and their legitimate interests shall be established by this Code and other laws of the Kyrgyz Republic.

2. Taxpayers’ rights shall be secured by the corresponding duties of the tax service officials.

Failure to perform or improper performance of the duty to ensure taxpayers’ rights shall involve liability under the laws of the Kyrgyz Republic.

Article 31. Taxpayers’ obligations

1. The taxpayer shall be required to:

1) timely and in full volume fulfill tax obligation in compliance with legislation on taxes and fees;

2) comply with lawful demands of the tax authority to eliminate revealed violations of the legislation on taxes and fees, and also not to obstruct the lawful activity of tax officials when they perform their official duties;

3) based on prescription, allow the Tax Service officials to inspect the property which is the object of taxation;

4) provide tax reports and documents related to taxation and fees following the procedure contemplated by the legislation on taxes and fees;

5) hold pecuniary settlements with the consumers during retail trade transactions or when providing services to people through cash, payment bank cards, receipts with the compulsory application of cash registers with fiscal memory and issuance of the control receipt to a consumer in compliance with Chapter 20 of this Code;

6) register audits in the Audit Register following the procedure established by an Authorized State Body.

2. The taxpayer shall fulfill other obligations contemplated by the legislation on taxes and fees.

Article 32. Rights and obligations of the tax agents

1. The tax agent shall have the same rights and bear the same obligations as the taxpayer unless otherwise provided in this Code.

2. The tax agent shall also be required to:

1) accurately and timely assess taxes withheld from the source of payment pursuant to the special part of this Code;

2) withhold the prescribed taxes from the taxpayer and remit them to the budget in the manner and by the deadline specified in this Code;

3) keep records of incomes paid out to taxpayers and of taxes withheld and remitted to the budgets, including separate records for each taxpayer personally;

4) file with the tax service office of the place of registration the tax reports required for the performance of tax control, including the information concerning the incomes paid and the persons receiving such incomes.

3. Where the tax agent fails to perform the imposed duties or in case of their improper performance, the tax agent shall incur liability under the legislation of the Kyrgyz Republic.

Chapter 4. Representation in tax relations.

Article 33. Representation in tax legal relations

1. The taxpayer shall have the right to participate in tax legal relations via his legal or authorized representative.

2. Taxpayer’s legal representative shall be a person authorized to represent the taxpayer under with the laws of the Kyrgyz Republic.

3. An authorized representative of the taxpayer shall exercise his authority on the basis of the constituent documents, a power of attorney issued by the taxpayer where the list of authorities of an authorized representative is indicated.

4. Personal participation of the taxpayer in tax legal relations shall not deprive him of the right to have a representative; likewise, participation of the representative shall not deprive the taxpayer of his right to personally participate in the indicated relations.

5. Actions and(or) inaction of the taxpayer’s representatives taken due to participation of that taxpayer in tax legal relations shall be recognized as the actions and(or) inaction of the taxpayer.

SECTION III. TAX SERVICE

Chapter 5. General rules

Article 34. Tasks and structure of the tax service agencies

1. Tax Service (tax service bodies) shall be assigned to monitor compliance with the legislation on taxes and fees and assist the taxpayers in fulfillment of their tax obligations.

2. Tax service bodies shall consist of an authorized government agency and tax bodies.

3. Tax Bodies shall include regional and functional divisions of the authorized government agency.

4. Tax bodies shall directly report to the respective higher-level authority and shall not report to the local state administrations and administrative and executive bodies of the local self-government.

Interference of the government bodies and local self-governments with the activities of the authorized government agency, the Ministry of Economy and Finance of the Kyrgyz Republic, and local tax collecting bodies in the exercise of their authorities established by this Code shall be prohibited.

5. The authorized government agency supervise the tax bodies.

Article 35. Bodies collecting taxes

1. In the cases contemplated by the legislation on taxes and fees, computation of the tax and (or) fee, receipt of tax and fee payments from the taxpayers and their remittance to the budget may be performed by the government bodies, executive and administrative bodies of the local self-governments, other authorized bodies and their officials – tax collecting bodies.

2. The rights, duties and responsibility of the tax collecting bodies shall be determined by the legislation on taxes and fees and other legislative acts of the Kyrgyz Republic.

Article 36. Rights of the tax service bodies

1. Tax service bodies shall have the right to:

1) develop and approve the normative legal acts contemplated by the legislation on taxes and fees in the manner established by the legislation of the Kyrgyz Republic;

2) upon taxpayers’ application, provide clarifications and commentaries on emergence, fulfillment and discharge of the tax obligations;

3) perform tax control in the manner established by this Code;

4) conduct inspections of the taxpayer’s monetary documents, accounting books, reports, estimates, cash on hand, securities, statements, returns, and other tax compliance documents, observing the requirements established by the legislation of the Kyrgyz Republic;

5) demand from the taxpayer submission of the documents showing computation, withholding and payment of taxes and fees to the budget in the format established by an authorized government body, explanations on filling up these forms, as well as the documents confirming accurate computation and timely withholding and payment of taxes and fees to the budget;

6) during performance of tax control in the manner established by this Code, receive copies of the documents from the taxpayer;

7) under Articles 120 and 121 of this Code, to inspect any objects of taxation that are used for the purpose of earning income regardless of their location;

8) on the issues incidental to taxation of the taxpayer under audit - an organization or an individual entrepreneur - receive in the order established by the legislation on taxes and fees of the Kyrgyz Republic, from banks or institutions performing certain types of banking operations the information about the existence of bank accounts and the numbers of these accounts, balances and movement of funds on these accounts, observing the requirements established by the laws of the Kyrgyz Republic on disclosure of information that constitutes a commercial secret, bank secret, or other secret protected by the legislation of the Kyrgyz Republic;

9) determine the taxpayer’s tax obligation based on indirect methods in the cases and following the procedure established by Chapter 17 of this Code;

10) to appeal to the Court under this Code and other legislative acts of the Kyrgyz Republic, including the cases of liquidation of an organization on the grounds contemplated by the legislation of the Kyrgyz Republic.

11) exercise control over the bodies collecting taxes.

2. To exercise the authorities established by this Code tax service bodies shall also have other rights contemplated by the legislation on taxes and fees and other legislation of the Kyrgyz Republic.

Article 37. Duties of the tax service bodies

1. Tax service bodies shall be required to:

1) observe the taxpayer’s rights;

2) protect the interests of the State;

3) perform tax compliance control, as well as timely withholding and remittance of mandatory tax and fee payments to the budget;

4) keep the record of the taxpayers, objects of taxation, and the record of taxes and fees accrued and paid to the budget following the procedure established by the authorized government agency;

5) assist taxpayers in their fulfillment of their tax obligations;

6) provide at the budget expense the tax reporting forms of an established format issued by the tax

service bodies;

7) explain the way the tax reporting forms should be filled up;

8) perform tax audits in strict compliance with the relevant orders;

9) keep confidentiality pursuant to the provisions of this Code;

10) deliver a notice to the taxpayer regarding fulfillment of the tax obligation by the due date and in the cases specified by this Code;

11) provide a statement from the taxpayer’s personal account regarding the status of settlements with the budget related to fulfillment of their tax obligations, at the taxpayer’s request, within a three day period;

12) keep on file for six years the documents confirming fulfillment of the tax obligation on payment of taxes and fees to the budget;

13) apply methods ensuring tax compliance and enforce discharge of the tax debt by the taxpayer in a mandatory way pursuant to this Code;

14) impose tax sanctions on the taxpayer following the requirements established by this Code, and impose sanctions pursuant to the legislation of the Kyrgyz Republic on administrative responsibility.

2. If the amount of due taxes exceeds the threshold established by the Criminal Code of the Kyrgyz Republic, at which point the criminal liability arises for tax evasion, tax service bodies shall forward to the appropriate law-enforcement bodies the materials for making a corresponding procedural decision based on the legislation of the Kyrgyz Republic in the following cases:

1) if an authorized office of the Tax Service sent the taxpayer a written decision regarding the essence of the complaint in the manner established by Article 145 of this Code and no appeal was filed by the taxpayer against the indicated decision with the Conciliation Commission under an authorized office of the Tax Service or with the Court within 30 days from the moment of delivery of that decision;

2) in case of expiration of the time period for filing an appeal contemplated by Article 143 of this Code, or

3) if there is a decision issued by the Conciliation Commission or by the Court on the complaint.

3. Tax service bodies shall also perform other duties contemplated by the legislation of the Kyrgyz Republic.

Article 38. Financing and logistical provision for the tax service bodies

1. Expenditures of the tax service bodies shall be funded from the republican budget and at the expense of the off-budget funds earmarked for special purpose.

2. The procedure and the norms of logistical provision for the tax service bodies shall be established by the Government of the Kyrgyz Republic.

Article 39. Officials of the tax service bodies

1. The persons who meet the requirements established by the legislation of the Kyrgyz Republic and the requirements of qualification characteristics of the positions approved by the authorized government body shall be appointed to the positions of the tax service officials.

2. A tax service official shall be conferred a class rank or a special rank following the established procedure.

3. Tax service officials shall be provided with the uniform, design and standards of the uniform being approved by the Government of the Kyrgyz Republic, at the expense of the republican budget.

4. Tax service officials shall be prohibited to concurrently perform any other paid work, except for creative, scientific or teaching activity, or engage in entrepreneurial activity.

Article 40. Conflict of interests

Tax service officials shall be prohibited to carry out their official duties in respect of the taxpayer in case:

1) under the legislation of the Kyrgyz Republic the taxpayer is in matrimonial relations with such official, is a relative, or is related by bonds of guardianship or wardship; or

2) this official or his relative has a direct or indirect financial interest.

Article 41. Tax Secret

1. Unless otherwise provided in this article, tax service bodies, tax collecting bodies, as well as all persons who are or have been employed by these bodies are required to keep confidential any information concerning a specific taxpayer which was received by them during their work and may only provide such information to:

1) officials of the Tax Service, Customs Service and Central Office of the Ministry of Economy and Finance of the Kyrgyz Republic in the course or for the purpose of carrying out their functions contemplated by the Tax and Customs Codes;

2) law enforcement bodies in the case of initiation of a criminal case against the persons committing tax violations;

3) the Court during the court proceeding for establishing taxpayer’s tax arrears or his responsibility for a tax offence;

4) tax service bodies of other states pursuant to international treaties or agreements, to which the Kyrgyz republic is a party;

5) an authorized government agency for bankruptcy cases, administrator (temporary administrator, special administrator, conservator, external manager) for purposes of carrying out their authorities contemplated by the legislation of the Kyrgyz Republic on bankruptcy, only in respect of those subjects against whom a bankruptcy case was initiated;

6) the KR Agency for Public Service, in respect of the persons who are required to file a declaration on property and incomes under the established legislation of the Kyrgyz Republic;

7) the Jogorku Kenesh, the Government of the Kyrgyz Republic, and the Chamber of Accounts of the Kyrgyz Republic pursuant to the legislation regulating their activities.

Except for the cases contemplated by Item 1) of this Part, the information shall be provided only upon the written request, and the taxpayer shall be informed simultaneously with the provision of such information.

2. A person receiving information under Part 1 of this Article shall be required to keep such information confidential pursuant to the provisions of this article.

3. Disclosure of the confidential tax onformation includes, particularly, the use or transfer to another person of the information concerning the taxpayer which constitutes this taxpayer’s secret , which became known to a tax service official and (or) the official of the tax collecting bodies, an involved expert, during the performance of their duties.

4. Information concerning the taxpayer may be disclosed to another person upon the taxpayer’s written consent.

5. The following information may be disclosed with no limits:

1) concerning the Taxpayer’s Tax Identification number;

2) taxpayer’s essential data (full name of an entity or last name, first name, patronymic of the taxpayer);

3) information concerning the registration as a VAT payer;

4) information concerning the spoiled or lost VAT invoices of the taxpayer;

5) information concerning the tax debt amounts acknowledged by the taxpayer.

6. Confidential tax information received by the tax service bodies and the local bodies collecting taxes has a special regime of storage and access.

7. Disclosure of the confidential tax information, as well as the loss of the documents with the confidential tax information shall result in liability under the laws of the Kyrgyz Republic.

8. Government bodies shall be prohibited to demand confidential tax information and documents from the tax service bodies and the local bodies collecting taxes except for the cases contemplated by this Article.

Article 42. Powers of the customs bodies to collect taxes

Customs bodies shall collect taxes to the budget pursuant to this Code and the customs legislation of the Kyrgyz Republic when goods cross the customs border of the Kyrgyz Republic.

Article 43. Powers of the administrative and executive bodies of the local self-governments to collect taxes and fees

1. In the cases contemplated by this Code and other normative legal acts, administrative and executive bodies of the local self-government may perform collection of the local taxes and fees, as well as of the national taxes transferred to the local budget in full volume.

2. The executive and administrative bodies of the local self-government shall have the right to select a body and(or) authorized persons who will be responsible for collection of taxes and fees (hereinafter referred to as "local tax bodies"), as prescribed by Part 1 of this Article.

3. Local tax bodies shall perform collection of taxes and fees in the manner established by this Code and by an authorized government agency.

4. Tax service bodies shall control the work of the local tax bodies.

5. Local tax bodies shall be required to:

1) issue a receipt or another document to the taxpayer confirming payment of taxes and fees;

2) deposit amounts with the bank institutions in full and in a timely manner, not later than the day following the day on which a receipt or another document is issued, confirming payment of the fee, or in the absence of the bank institutions in the inhabited area, to deposit the indicated amounts to the local budget within three business days;

3) ensure that receipts and documents are filled out properly and stored securely;

4) file reports with a tax body on accrued and received amounts of taxes and fees, on use of receipts and documents, as well as on deposit of tax and fee amounts with the bank or administrative and executive bodies of the local self-governments in the manner and by the deadline established by an authorized government agency.

6. To perform their duties, local tax bodies shall have the right to:

1) keep records of the taxpayers’ registration;

2) keep accounting of receipts transferred to the corresponding local budget;

3) conduct office verification;

4) conduct on-site inspections and time studies;

5) initiate lawsuits under this Code and other legislation of the Kyrgyz Republic, including the lawsuits on tax debt enforcement pursuant to this Code;

6) demand and receive from the taxpayer the documents concerning the accrual and payment of taxes and fees collected by administrative and executive bodies of the local self-governments.