Kyrgyzstan Business Law News Digest: July 2025

1. A NOTARIAL ORDER IS OFFICIALLY RECOGNIZED AS AN ENFORCEMENT DOCUMENT IN THE KYRGYZ REPUBLIC

The President of the Kyrgyz Republic signed the Law "On Amendments to Certain Legislative Acts of the Kyrgyz Republic on Notarial Activity", which amended the Law of the Kyrgyz Republic "On Notaries", providing for the transfer of powers to notaries to consider and issue a notarial order on claims for the collection of monetary amounts or the recovery of movable property from a debtor in the following cases:

1. the claim is based on a notarized transaction;
2. the claim is based on a transaction concluded in simple written form;
3. the claim is based on a protest of a bill of exchange for non-payment, nonacceptance and non-dating of acceptance, concluded by a notary;
4. a claim for the recovery of alimony for minor children has been filed, not related to the establishment of paternity, challenging paternity (maternity) or the need to involve third parties;
5. a claim for debt collection has been filed without taking into account penalties for mandatory payments, with the exception of taxes and insurance premiums;
6. a claim for the recovery of accrued but unpaid wages to the employee has been filed.

A notarial order is an official enforcement document issued by a notary without a court trial, which allows the collection of debt or property.

Thus, it is possible to obtain an enforcement document without the participation of the court, if the debt is confirmed by documents and there is no dispute.

The procedure for issue of the notarial order:

1. The application is submitted to a notary - at the place of residence of the debtor or at the place of residence of the claimant (in the case of alimony).
2. The notary issues an order within 3 (three) days without calling the parties, if the documents are in order.
3. A copy of the order is sent to the debtor, who has 10 calendar days to submit his objections.
4. If the debtor has filed reasonable objections, the order is cancelled, and the claimant is informed of the right to go to court.
5. If there are no objections, the order comes into force and can be sent to the bailiff.

Why is this important?

For individuals and businesses, this means simplifying and accelerating the collection procedure. This is especially relevant for microfinance organizations, landlords, employers, alimony payers and all those who previously lost time and money on litigation even in undisputed situations.

However, it is important to remember: if there is a dispute between the parties, a notarial order is not issued. The notary is obliged to cancel the order upon receipt of objections and send the parties to court.

The law comes into force on 1 January 2026, with the exception of Article 1, as well as Articles 5-7 regarding the collection of alimony for the maintenance of minor children, which came into force on 16 June 2025.

2. THE LIST OF GOODS EXEMPT FROM VAT ON EXPORT FROM FREE ECONOMIC ZONES HAS BEEN APPROVED

By Resolution of the Cabinet of Ministers of the Kyrgyz Republic No. 315, the List of goods exempt from value added tax(VAT) when exported from the territory of free economic zones for delivery to the territory of the Kyrgyz Republic, including when alienated in favor of persons who are not subjects of free economic zones, was approved, which included motorcycles (including mopeds) and bicycles with an installed auxiliary engine, with or without sidecars, strollers.

The General Directorates of the free economic zones of the Kyrgyz Republic are instructed to bring this resolution to the attention of interested persons and departments of the Kyrgyz Republic.

Effective Date: 1 January 2026.

3. NEW PHASE IN THE DEVELOPMENT OF THE GOVERNMENT SECURITIES MARKET IN KYRGYZSTAN

On 26 June 2025, the Decree was signed, which sets forth measures to advance the government securities market. The decree underscores the strategic objective of enhancing Kyrgyzstan's financial sovereignty and diversifying its sources of public financing.

Key provisions and their legal implications

1. Strengthening the domestic government securities market
   
   The decree directs the Cabinet of Ministers to expand the share of domestic public debt by comprehensively developing the government securities market. This approach aligns with international practice, where domestic borrowing is generally viewed as less risky for macroeconomic stability than external borrowing. It also mitigates currency risks and reinforces the national financial system.
   
   The envisioned comprehensive development encompasses not only increasing the volume of issued securities but also enhancing market infrastructure, transparency, and liquidity.
2. Access to international capital markets
   
   The decree provides for initiatives to place government securities on international capital markets, including through the issuance of Eurobonds. This will facilitate access to long-term investments and bolster Kyrgyzstan's credit rating.
   
   By diversifying funding sources, the country reduces its reliance on a single investor segment, thereby mitigating associated risks.
3. Adoption of a new debt servicing model
   
   
   The decree also introduces a new model for public debt servicing aimed at improving debt management efficiency. This may involve restructuring existing obligations, issuing new instruments, and reducing servicing costs.

These measures are consistent with recognized international best practices and are intended to establish a transparent, liquid, and competitive government securities market. This, in turn, is expected to attract new investment opportunities and support sustainable economic growth in Kyrgyzstan.

4. NEW RULES FOR EXPORTERS AND IMPORTERS: LAUNCH OF AN ELECTRONIC "ONE-STOP SHOP" ON THE PROCEDURE FOR ISSUING ELECTRONIC PERMITS FOR FOREIGN ECONOMIC ACTIVITY (FEA).

On 18 June 2025, the Cabinet of Ministers of the Kyrgyz Republic adopted Resolution No. 349, which approved a new Regulation regulating the process of obtaining licenses, permits, opinions, identification opinions and clarifications through the Tulpar System "onestop shop" information system for the export, import and transit of goods that are subject to non-tariff regulation measures or export control in the Kyrgyz Republic.

What has changed for businesses?

• An updated procedure for obtaining licenses, permits and opinions for the export, import and transit of goods through the electronic "single window" system is being introduced.
• Uniform rules for filing, reviewing and receiving documents for all government agencies authorized to issue such documents are established.
• The State Enterprise "Single Window Center for Foreign Trade" under the Ministry of Economy and Commerce is required to modernize the system to meet the new requirements.
• Previous regulations governing these processes (No. 708 of 2019, No. 156 of 2021, etc.) have been cancelled.

Companies engaged in foreign economic activity will have to:

• issue all permits through the updated electronic platform;
• organize the work of employees and contractors taking into account the new rules;
• review delivery timeframes and contractual obligations, taking into account the standardized terms for issuing permits.

5. AMENDMENTS TO THE TAX CODE OF THE KYRGYZ REPUBLIC TO SUPPORT BUSINESS ENTITIES

On 19 June 2025, the Parliament of the Kyrgyz Republic adopted the Law of the Kyrgyz Republic "On Amendments to Certain Legislative Acts of the Kyrgyz Republic on Reducing the Tax Burden on the Population and Business Entities."

This draft law is aimed at easing the tax burden on both individuals and business entities through a range of measures, including:

• Write-off of tax arrears: Tax debts acknowledged by taxpayers for tax periods prior to January 1, 2022, will be written off.
• Relief for agricultural exports:
  • 80% of tax arrears and
  • 100% of accrued penalties and tax sanctions
  • related to the export (sale) of agricultural animals from Kyrgyzstan will be written off.
• Higher revenue threshold for retail: The annual revenue ceiling for retail entities eligible for the 0.5% tax rate is increased from KGS 30 million to KGS 50 million.
• Reduced tax rate for jewelry businesses: A reduced tax rate of 0.25% is established for entities engaged in the production and/or sale of jewelry.
• Voluntary tax declaration: Certain categories of individual entrepreneurs are granted the right to voluntarily submit a Unified Tax Declaration.
• Exemption from income tax penalties: Small and medium-sized businesses are exempt from income tax penalties arising from the absence of primary accounting documents for goods. Additionally, tax debts accrued for previous periods under these circumstances may be written off.
• Extension of preferential tax regimes: The duration of preferential tax regimes and the scope of exemptions from penalties and tax sanctions are extended.
• Elimination of income tax withholding obligations: Tax agents are relieved from the duty to withhold and pay income tax on goods purchased without primary accounting documents.
• Abolition of vehicle property tax: The property tax on vehicles is abolished.
• Write-off of vehicle property tax arrears: Unpaid vehicle property tax obligations accrued before 1 January 2025, will be written off.
• Extension of zero property tax rate on agricultural land: The zero tax rate on property tax for agricultural land is extended until 31 December2030.
• Prohibition on retroactive tax audits: Tax audits covering periods prior to 1 January 2022, are prohibited.
• Reduced tax rates for sales to unidentified entities: Lower tax rates are introduced for businesses selling goods to unidentified purchasers.
• Simplified removal of travel restrictions: The process for lifting travel restrictions imposed on taxpayers with tax arrears is streamlined.

The draft law was prepared pursuant to the Decrees of the President of the Kyrgyz Republic "On Measures to Reduce the Tax Burden on the Population and Business Entities and Improve Tax Administration" and "On Measures to Support Business Entities and Optimize Tax Rates and Tax Administration."

6. THE WATER CODE OF THE KYRGYZ REPUBLIC HAS BEEN ADOPTED: KEY CHANGES AND IMPACT ON BUSINESS AND INTERNATIONAL PROJECTS

The Water Code of the Kyrgyz Republic, adopted on 27 June, 2025, governs the use, management, protection and development of water resources for guaranteed, sufficient and safe water supply to the population, environmental protection and ensuring the rational development of the water fund and irrigation fund of the republic. The Code contains a number of provisions that are particularly relevant for businesses, corporate projects and foreign investors.

Key regulations:

• Water resources and lands of the water fund are recognized as the exclusive and inalienable property of the state. Use is possible only within the framework of established permits.
• The basin management principle has been introduced, providing for planning and coordination at the level of hydrographic basins (for example, for Issyk-Kul and large rivers).
• For businesses, the key provisions will be on water use permits (up to 15 years), and for large infrastructure and international projects, special water use permits for up to 50 years issued by the Cabinet of Ministers.
• The priority of water use has been determined: first of all for drinking and domestic water supply, then for irrigation and watering, energy, industry and other purposes.
• Fees for water use have been established, including administrative fees for issuing, changing and extending permits.
• Compensation mechanisms have been established in the event of restrictions or cancellation of water use permits in the public interest.
• Requirements for the installation of water meters at the expense of water users have been prescribed.

Corporate water users (energy, mining and food industries, as well as agriculture companies) will need to update their water use strategies in accordance with the new code.

Foreign investors and international financial institutions should take into account the mandatory receipt of special permits for large investment projects related to dams, hydropower, drinking water supply, irrigation and drainage.

When implementing projects, environmental assessment procedures and approvals from a number of government agencies, as well as compliance with minimum environmental flow conditions will be mandatory.

We recommend that companies and project offices conduct a legal audit of their current water use regimes and contracts, as well as prepare in advance for obtaining new permits or extending existing ones within the framework of the updated legislation.

According to the Law of the Kyrgyz Republic "On the introduction of the Water Code of the Kyrgyz Republic" No. 129 dated 27 June 2025, the Water Code of the Kyrgyz Republic shall be put into effect on 1 January 2026.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.