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Taxation of noncommercial organizations
according to the new Tax Code of the Kyrgyz Republic

§ 1. Introduction

From January 1, 2009 the new Tax Code of the Kyrgyz Republic will enter into force.
The new Tax Code shall include the following substantial novelties:
¾ number of taxes will decrease from 16 to 8,
¾ VAT rate will decrease from 20% to 12%,
¾ three indirect taxes (1) tax on the use of automobile roads, (2) allocations to the
special fund for prevention and liquidation of emergency situations and (3) tax on
rendering chargeable goods and services to individuals, will be combined into a
single indirect sales tax on goods and services,
¾ a new tax will be introduced– property tax,
¾ and others.
In the new Tax Code there are also changes in taxation of noncommercial organizations
(NCO). In compliance with the new Tax Code there are two regimes of NCO taxation: (1) for all
NCOs and (2) for those NCOs, which will carry out their activity as charitable organizations.

§ 2. NCO taxation

In part 11 of article 153 of the new Tax Code there is a definition for the notion of NCO
for taxation purposes, according to which:
“Noncommercial organization” – organization, fulfilling the following requirements:
1) the given organization is registered in organizational and legal form, provided by the
legislation of the Kyrgyz Republic for noncommercial organizations;
2) the given organization does not pursue profit-making as the main goal of its activity and
does not distribute received profit among its members, founders and officials.
The given definition was transposed without changes to the new Tax Code from the
existing Tax Code.
At the present time there are the following organizational and legal forms of NCO in the
legislation of the Kyrgyz Republic:
1) Public Association;
2) Foundation;
3) Institution;
4) Union (association) of legal entities;
5) Noncommercial cooperative;
6) Partnership of owners of housing (condominium);
7) Association of water users;
8) Jamaat (community organization);
9) Credit union;
10) Stock exchange;
11) Self-regulating organization of professional participants of equity market;
12) Private Pension’s Fund;
13)
Association of employers;
14) Trade Union;
15) Political party;
16) Religious organization.
According to data of National statistics committee more than 18 000 NCOs are registered
in the Kyrgyz Republic.

The new Tax Code will stimulate the development of NCO in a certain way, as it
preserved traditional exemptions from profit tax of noncommercial income of NCO like grant,
humanitarian assistance, endowment, and membership and entrance fees. In parts 6, 7, 29 and 4
of article 153 of the new Tax Code following definitions are given:
6) «Grant» – assets, free of charge transferred by states, international, foreign and
domestic organizations to the Government of the Kyrgyz Republic, bodies of local self-
administration, state bodies, as well as to noncommercial organizations, not participating in the
support of political parties or candidates of election campaigns;
7) «Humanitarian assistance» – assets, free of charge transferred by states,
organizations to the Government of the Kyrgyz Republic, bodies of local self-administration,
state bodies, noncommercial organizations, as well as to needy individuals, in the form of food,
hardware, outfit, equipment, medical drugs and medicines, and other property for improvement
of life conditions and mode of life of the population, as well as for warning and liquidation of
emergency situation of military, ecological and technogeneous character, on conditions of their
further use and/or free of charge distribution.
29) «Membership fees» – assets, transferred by member of noncommercial organization,
in the amount and in order, provided in constituent documents of this organization, on conditions
that this transfer shall not be conditioned by counter rendering of goods, works, services to
member of the given organization either free of charge or at the price, lower than their self-cost;
4) «Entrance fees» – assets, transferred by a person, during his/her entrance to the
noncommercial organization, based on membership in the amount and in order, provided in
constituent documents of the given organization, on conditions that the given transfer shall not
be conditioned by counter rendering of services to the member of the given organization free of
charge or at the price lower than their self-cost.
Definitions of notions “humanitarian assistance”, “membership fees” and “entrance
fees” were transported to the new Tax Code from the existing Tax Code without any changes.
In the definition of the notion “grant” such words as “except for organizations,
pursuing political purposes” were replaced by words “not participating in the support of
political parties or candidates of election campaigns”. These changes carry positive character, as
words “political purposes” can be interpreted in a broad sense. In a broad sense, “politics”
means – state affaires (or common affaires). Due to this fact, notion “political purposes” could
include in itself not only “strive for power”, but also such goals as “development of democracy”,
“war against poverty”, “fight for honest elections” and many others. Consequently, tax bodies
could reject recognizing certain sum for implementation of certain program as grant, for
instance, program financing, targeted at the war against poverty. Words, used in the new Tax
Code “not participating in the support of political parties or candidates of election
campaigns” specify the goals of the given ban and do not allow artificially giving them broad
interpretation.
In part 3 of article 189 of the new Tax Code such norms, which were present in part 6 of
article 93 of the existing Tax Code are preserved, according to which membership and entrance
fees, humanitarian assistance, grants and endowments are exempt from profit tax:
«Article 189. Non-taxable incomes
1. The following incomes are free from profit tax:
3) received by noncommercial organizations:
a) membership and entrance fees;
b) humanitarian assistance and grants, on conditions that their use is only for charter
purposes;
c) the value of free of charge received assets on conditions that their use is only for
charter purposes».
According to part 2 of article 212 of the new Tax Code income of communities of
disabled persons of I and II group are free from taxation, as well as of enterprises of Kyrgyz
community of blind and deaf people, where disabled, blind and deaf persons shall compose not

less than 50 percent from the whole number of employed and their salary shall compose the sum
not less than 50 percent from the total fund of labor remuneration. The list of indicated
enterprises shall be determined by the Government of the Kyrgyz Republic. The given list is not
limited and along with enterprises NCO of disabled persons could also be included.
As regards VAT, the new Tax Code does not exempt NCO fully from this tax, however
prescribes the exemption of specific activities of NCO. In article 252 of the new Tax Code such
norms, which were present in parts 2 and 3 of article 145 of the existing Tax Code are also
preserved:
«Article 252. Supplies by noncommercial organizations
Supplies by noncommercial organization for payment, which do not exceed the expenses
to carry out these supplies, are free from VAT, if these supplies are:
1) for social welfare and protection of children or indigent citizens of advanced age; or
2) in the sphere of education, medicine, culture and sports».

In compliance with part 5 of article 343 of the new Tax Code some kinds of NCO are
free from land tax:
«Article 343. Exemption from taxation
If the otherwise is not provided by the present section, the following categories of lands
are free from taxation:
5) lands of organizations of disabled persons, war participants and similar categories of
people and lands of communities of blind and deaf people».
In all other cases organizational and legal form of NCO is not a ground for application of
any specific tax regime according to the new Tax Code. If NCO does receive profit in the
process of its activity, it is profit tax payer as well as all other subjects. If the volume of taxable
supplies by the given organization reaches in the period of 12 consequent months the registration
threshold on VAT (today it is 4 mln. soms), then it is VAT payer. Workers of NCO pay income
tax from received incomes. If organization has taxable base on sales tax, then this tax also is
subject to payment. NCO is also taxed by local taxes and fees, property tax and land tax.

§ 3. Taxation of charitable organizations

The existing Tax Code prescribes the procedure for preliminary recognition of NCO as
charitable organization (procedure of certification) by tax bodies. In part 4 of article 9 of the
acting Tax Code the following definition of the notion “charitable organization” is given:
“chartable organization” – noncommercial organization: (1) created and carrying out its
activity in compliance with the legislation on noncommercial organizations and charitable
activity; (2) not dealing with the activity on production and sale of excise goods and gambling
business; (3) which received in established by law procedure document, issued by tax
bodies, certifying its rights for tax benefits in compliance with articles 112 and 145 of the
present Code.
Despite the fact that in Kyrgyzstan since 1999 the Law “On philanthropy and charitable
activity” has been in force and certain tax benefits are prescribed for charitable organization, the
number of NCOs, which received the status of “charitable organization” is very small. According
to the acting Tax Code, charitable organizations are not enjoying substantial benefits, in
comparison to other NCOs, despite the fact that they should comply with stricter requirements.
The new Tax Code prescribes substantial tax benefits for charitable organizations.
Charitable organizations are free from (1) profit tax (for all kinds of incomes), (2) VAT, if the
supplies are for charitable purposes, (3) sales tax
In article 208 of the new Tax Code there is an encouraging norm for legal entities and
individual entrepreneurs to make endowments for the benefit of charitable organizations:

«Article 208. Deductions as expenses on charity
Free of charge transferred assets, including cash means and property (by balance value)
to charitable organizations, as well as organization of culture and sports disregarding the form of
ownerships in the period of tax year in the amount, not exceeding 10 percent of taxable income
of the tax payer, who transferred them, are subject to deduction from the total annual income».

The new Tax Code also cancels the procedure of preliminary recognition of NCO as
charitable organization (procedure of certification) by tax bodies.
In part 2 of article 153 of the new tax Code the following definition of the notion
“charitable organization” is given:
«2) “charitable organization” – noncommercial organization:
а) created and carrying out charitable activity in compliance with the legislation of the
Kyrgyz Republic on noncommercial organizations and charitable activity;
б) not participating in the activity on production and/or sale of excise goods and
gambling business;
в) not participating in the support of political parties or election campaigns».

In compliance with the new Tax Code, for acquisition of the status of charitable
organization NCO shall not be obliged to preliminarily refer to tax bodies and to receive from
them written confirmation on its right for tax benefits, which are set for charitable organizations.
However, they should correspond to requirements, which are established by the legislation for
charitable organizations.

§ 4. Requirements for charitable organizations

By the Law of the Kyrgyz Republic «On philanthropy and charitable activity» from
November 6 of 1999 N 119 (further Law) the following requirements are established for
charitable organizations.

1. The article 1 of the Law prescribes the goals, for achievement of which charitable
organizations could be created:
¾ Social welfare and protection of citizens, including the improvement of economic
conditions of indigent persons, social rehabilitation of unemployed, disabled and
other persons, who due to their physical and (or) intellectual peculiarities, other
circumstances are not independently able to enjoy their rights and lawful interests;
¾ Providing assistance to victims of natural disasters, ecological, production or other
catastrophes, social, national, religious conflicts and forces displaced persons;
¾ Assistance in strengthening peace, friendship and harmony among nations, prevention
of social, national, religious conflicts;
¾ Assistance in the activity in the sphere of education, science, culture, arts,
enlightenment, spiritual development of personality;
¾ Assistance in protection of maternity, childhood;
¾ Assistance in the activity in the sphere of prevention and protection of health of
citizens, as well as propaganda of healthy life style, improvement of moral and
psychological condition of citizens;
¾
Assistance in the activity in the sphere of physical culture and mass sports;
¾ Environmental protection and protection of animals;
¾ Protection and proper maintenance of buildings, objects and territories, which have
historical, religious or environmental meaning, and places of burial grounds.

Transfer of cash and other material means, providing assistance in other forms to
commercial organizations, as well as support of political parties, movements, groups and
campaigns are not considered as charitable activity.

2. In compliance with article 5 of the Law “Charitable organization is nongovernmental
(noncommercial) organization, created for achievement of goals, provided by the present Law on
charitable activity in the interests of the community as a whole or of separate categories of
persons”.

3. In compliance with article 6 of the Law “Charitable organizations can be created in the
form of public organizations (associations), foundations, institutions and in other forms.
Charitable organization can be created in the form of institution, if its founder is charitable
organization”.

On the basis of the content of the given norm, it is possible to make conclusion that
institution, created not by “charitable organization” can not be considered as charitable
organization.

4. In compliance with part 4 of article 7 of the Law “Charitable organization shall have a
right to carry out economic activity only for achievement of the goals, for which it was created,
and corresponding these goals”.

In article 12 of the Law of the Kyrgyz Republic “On noncommercial organizations” the
following norm is provided:
«Noncommercial organization shall have a right to carry out economic, including
production activity without distribution of received profit among founders, members, officials,
other employees and members of management bodies. This activity could include in itself
production and sale of goods, accomplishment of works, rendering of services with counter
compensation and other kinds of economic activity, if they do not contradict the goals and
tasks of the organization».
As it follows from the given norm, in Kyrgyzstan there are minor limitations for NCO in
carrying out economic activity. Kinds of economic activity of NCO must not contradict the goals
and tasks of the organization. For instance, public association, the goal of which is the fight
against smoking, has no right to trade tobacco products, as the sale of tobacco products would
contradict the goals of creation of the given public association.
As opposed to the given approach, which grants broad rights to NCO for carrying out
economic activity, charitable organizations are allowed to carry out only those economic
activities that correspond the goals of creation of charitable organization. For instance,
charitable organization, created for “assistance in the activity in the sphere of education, science,
culture, arts, enlightenment, spiritual development of the personality” has a right to earn means,
organizing trainings for payment, but it will not have a right to organize sewing house for
production and sale of clothes. It is important to mention that this approach substantially limits
charitable organizations in carrying out their economic activity.

In the following scheme one can see differences of these approaches:

NCO Charitable organization
Prohibited Allowed Prohibited Allowed

5. In compliance with part 4 of article 7 of the Law “For creation of economic conditions
for achievement of charitable purposes charitable organization shall have a right to establish
economic companies. The participation of charitable organization in economic companies
jointly with other persons is not admitted».

Following from the content of the given norm, it is possible to conclude that only
charitable organization can solely be founder of affiliated companies.

6. In compliance with part 2 of article 8 of the Law “Financing of charitable organizations
from republican and local budgets, off-budget foundations of state bodies is prohibited”.

The given norm poses serious problem for charitable organization in receiving means
through the mechanism of Social Services Contracting.

However, in part 4 of article 11 of the Law there are norms, which fully contradict the
above-mentioned norm:
«State bodies and bodies of local self-administration, recognizing the social importance of
charitable activity, can provide assistance to participants of charitable activity in the following
forms:
¾ Material and technical support and subsidizing of charitable organizations (including
full or partial exemption from payment of services, provided by state organizations and
from payment for the use of state property);
¾ Financing on the basis of contest of charitable programs, developed by charitable
organizations;
¾ Transfer of state property into ownership of charitable organizations free of charge or
on easy terms in the process of its denationalization and privatization, carried out in the
order, provided by the legislation».

The legislator must give explanation to these contradicting to each other norms or to make
amendments to the Law with the purpose of elimination of such contradictions.

7. In compliance with parts 3 and 4 of article 9 of the Law: “Charitable organization
shall not have a right to spend for labor remuneration of its administrative and managing

personnel more than 2 percent of financial means, spent by this organization for a financial year.
The given limitation does not apply for labor remuneration of persons, participating in the
implementation of charitable programs
If benefactor or charitable program does not specify the otherwise, not less than 98
percent of charitable endowment in the form of money shall be spent for charitable purposes in
the period of a year from the moment of obtainment of the given endowment by charitable
organization. Charitable endowments in natural form are directed for charitable purposes in the
period of a year from the moment of their obtainment, if the otherwise is not provided by
benefactor or charitable program».
However, the presence of “charitable program” of NCO could relax the given
impracticable norm. According to article 10 of the Law “Charitable program is a complex of
activities, approved by the highest management body of charitable organization and directed at
solving specific tasks, corresponding to charter goals of the given organization.
Charitable program includes the budget of assumed inflows and planned expenses
(including labor remuneration of persons, participating in implementation of charitable
programs), establishes stages and terms of its realization.
For financing of charitable programs (including expenses on their material and technical
support, organizational and any other support, for labor remuneration of persons, participating in
the realization of charitable programs, and other expenses, related to realization of charitable
programs) shall be spent not less than 98 percent of income flows, received in a financial year,
from non-operational economic activities, from established by charitable organization economic
companies and from allowed by law economic activity. In realization of charitable programs
received means are spent in terms, provided by these programs».
Using “charitable program” many NCO could overcome the barrier of «98% and 2%» and
correspond the requirements of the Law. Charitable program almost reduces to zero
impracticable requirements of the Law (98% and 2%), as the Law does not set any conditions in
relation to the content of charitable program. NCO has a right at its discretion to draw up
charitable program and its budget. The Law also does not prescribe any conditions in relation to
the number of charitable programs, which NCO can adopt in the period of a year. In the given
situation NCO in the beginning of a year can adopt one charitable program, and further in the
period of a year to edit it as many times as it is necessary. However, it is important to remember
that charitable program must be approved by the highest management body of the organization.
For instance, charitable program of public association can be approved only by the highest
management body of public association- General Assembly of members of public association.
Charitable program of the foundation can be approved only by the highest management body of
the foundation – Supervisory Board of the foundation.

8. In compliance with parts 1 and 2 of article 12 of the Law: «Charitable organization
provides free access, including access to mass media, to its annual reports.
Data on the amounts and structure of incomes of charitable organization, as well as data on
the amount of its property, its expenses, number of workers, on labor remuneration and on
engagement of volunteers is not considered commercial secret».
And according to part 4 of article 13 of the Law «In case of conduct of public campaigns
on the collection of endowments charitable organization is obliged to publish annually report on
the amounts of attracted endowments and on their use in official print matters».

9. In compliance with parts 3 and 5 of article 13 of the Law: « In case of performance of
an act by charitable organization, contradicting its goals, as well as the present Law, authorized
bodies shall send warning to it in written form.
In case of repeated warning of charitable organization in written form, it can be dissolved
in the procedure, provided by the legislation of the Kyrgyz Republic».

§ 5. Conclusion

Tax regime for NCO in Kyrgyzstan is far from ideal and has substantial short comings.
The new Tax Code did not preserve the norm, encouraging citizens (who are not individual
entrepreneurs) to make endowments for the benefit of charitable organizations. The new Tax
Code also did not preserve the norm, exempting charitable organization from land tax. In the
new Tax Code exemption of NCO from tax- property tax is not provided. The given tax will lie
by heavy burden on the shoulders of noncommercial, including charitable organizations. There is
more work to be done to bring the conditions of NCO taxation in Kyrgyzstan closer to
international standards
However, it is important to mention that the new Tax Code establishes a more favorable
tax regime for NCOs than the present Tax Code, especially for those NCOs which carry out their
activity as charitable organizations.
Comparative table of the existing and new Tax Codes shall be attached to the article.

Nokatbek Idrisov
Legal Consultant
International Center for Not-For-Profit Law in Kyrgyzstan

Attachment 1

Comparative table
of the existing and the new Tax Codes of the Kyrgyz Republic
(in part, related to taxation of noncommercial organizations)

Existing Tax Code
New Tax Code

Comments
Article 9. Notions, used in Tax Code
4. “Charitable organization” – noncommercial organization:
1) created and carrying out charitable activity in
compliance with the legislation on noncommercial
organizations and charitable activity;
2) not dealing with activity on production and sale of
excise goods and gambling business;
3) which have received in established procedure
document, issued by tax bodies, certifying its rights for
tax benefits in compliance with articles 112 and 145 of the
present Code.

4-1. “Charitable activity” – voluntary activity of individuals
or legal entities, carried out for charitable purposes, provided
by the legislation on charitable activity through transfer of
assets, rendering of services and accomplishment of works
to citizens and legal entities free of charge or on easy terms
or for payment, not exceeding the expenses, during their sale.

Article 153. Institutions, notions and terms, used in special
part of the present Code.
2) “Charitable organization” – noncommercial organization:
a) created and carrying out charitable activity in compliance
with the legislation on noncommercial organizations and
charitable activity;
b) not dealing with activity on production and (or) sale of
excise goods and gambling business;
c) not participating in the support of political parties or
election campaigns;

1) “Charitable activity” – voluntary activity of individuals or
legal entities, carried out for charitable purposes, provided by
the legislation of the Kyrgyz Republic on charitable activity
through transfer of assets, rendering of services and
accomplishment of works to citizens and legal entities in
unselfish manner (free of charge or on easy terms) or for
payment, not exceeding the expenses, during their sale.
Notions, used in the existing Tax Code, are mainly
preserved in the new Tax Code (further “Code”).
Numeration of articles and paragraphs changed.

Definition of the notion «Charitable organization» in the
new Code changed:

– paragraph (3) was excluded, which have received in
established procedure document, issued by tax bodies,
certifying its rights for tax benefits in compliance with
articles 112 and 145 of the present Code.

– new paragraph (c) was added of the following content:
«not participating in the support of political parties or
election campaigns».

Introduced amendments substantially relieve the
conditions of taxation of charitable organizations, as they
eliminate the process of receiving certificate or other
document on recognition of NCO as charitable
organization.

The notion «Charitable activity» and its definition were
transported to the new Tax Code from the existing Tax
Code with insignificant changes.

There are no objections on introduced amendments.

4-2. “Grant” – assets, free of charge transferred by states,
international, foreign and domestic organizations to the
Government of the Kyrgyz Republic, bodies of local self-
administration, state and noncommercial organizations
(except for organizations, purposing political goals)

4-3. “Humanitarian assistance” – assets, free of charge
transferred by states, international, foreign and domestic
organizations to the Government of the Kyrgyz Republic,
bodies of local self-administration, state and noncommercial
organizations, as well as to individuals, in the form of food,
consumer goods, hardware, outfit, equipment, medical drugs
and medicines, other items for improvement of life
conditions and mode of life of the population, as well as for
warning and liquidation of emergency situations of military,
ecological and technogeneous character , on conditions of
their further consumption and (or) free of charge distribution.

29. “Noncommercial organization” – organization, fulfilling
the following requirements:
1) the given organization is registered in organizational
and legal form, provided by the legislation of the Kyrgyz
Republic for noncommercial organizations;
2) the given organization does not pursue profit-making
as the main goal of its activity and does not distribute
received profit among its members, founders and officials.

68. “Membership fees” – assets, transferred by persons, who
are members of noncommercial organization, based on
membership in the amount and in the order, provided in
constituent documents of the given organization, on
conditions that such transfer shall not be conditioned by
counter rendering of services to the member of the given
organization free of charge or at the price lower than
their self-cost.

69. “Entrance fees” – assets, transferred by persons during
their entrance into noncommercial organization, based on 6) “Grant” – assets, free of charge transferred by states,
international, foreign and domestic organizations to the
Government of the Kyrgyz Republic, bodies of local self-
administration, state and as well as noncommercial
organizations, not participating in the support of political
goals or election.

7) “Humanitarian assistance” – assets, free of charge
transferred by states, organizations to the Government of the
Kyrgyz Republic, body of local self-administration, state,
noncommercial organization, as well as to needy individual,
in the form of food, hardware, outfit, equipment, medical
drugs and medicines, other property for improvement of life
conditions and mode of life of the population, as well as for
warning and liquidation of emergency situations of military,
ecological and technogeneous character , on conditions of
their further consumption and (or) free of charge distribution.

11) “Noncommercial organization” – organization, fulfilling
the following requirements:
a) the given organization is registered in organizational and
legal form, provided by the legislation of the Kyrgyz Republic
on noncommercial organizations, as well as by other
legislation of the Kyrgyz Republic;
b) the given organization does not pursue profit-making as the
main goal of its activity and does not distribute received profit
among its members, founders and officials.

29) “Membership fees” – assets, transferred by members of
noncommercial organization, in the amount and in the order,
provided in constituent documents of the given organization,
on conditions that such transfer shall not be conditioned
by counter rendering of goods, works and services to the
member of the given organization free of charge or at the
price lower than their self-cost.

4) “Entrance fees” – assets, transferred to a person during
his/her entrance into noncommercial organization, based on
Our suggestion on the replacement of the words «, not
pursuing political goals» to the words « not
participating in the support of political goals or
election », – was accepted.

The notion «Humanitarian assistance» and its definition
were transported to the new Tax Code from the existing
tax Code with minor changes. We agree with introduced
amendments.

The notion «Noncommercial organization» and its
definition were transported to the new Tax Code from the
existing tax Code without changes.

The notion «Membership fees» and its definition were
transported to the new Tax Code from the existing tax
Code without changes.

The notion «Entrance fees» and its definition were
transported to the new Tax Code from the existing tax

membership in the amount and in the order, provided in
constituent documents of the given organization, on
conditions that such transfer shall not be conditioned by
counter rendering of services to the member of the given
organization free of charge or at the price lower than
their self-cost. membership in the amount and in the order, provided in
constituent documents, on conditions that such transfer
shall not be conditioned by counter rendering of services
to the member of the given organization free of charge or
at the price lower than their self-cost.
Code without changes.
SECTION III
INCOME TAX FROM INDIVIDUALS

Article 88. Non-taxable incomes

2. Total annual income of individual shall decrease to the
sum of free of charge transferred assets, including cash
means and property (by balance value) to charitable and
budget organizations in the period of a tax year in the
amount, not exceeding 5 percent of taxable income of tax
payer, on conditions that these assets shall not be used for the
benefit of individual, who transferred them.

There is no such provision. SECTION VII
INCOME TAX

There is no such provision.

Article 167. Incomes, non-taxable by income tax

The following incomes, are not levied by income tax:
37) free of charge transferred assets from the state,
noncommercial organizations to persons, who are in need of
social rehabilitation or adaptation, medical assistance, with
income lower than living-wage:
а) refugees; b) heavily ill persons.

As opposed to the existing Tax Code, the new Tax Code
includes the provision, encouraging citizens to make
endowments to charitable and budget organizations (such
NCOs as charitable foundations, state institutions:
schools, universities, hospitals etc.) SECTION IV
PROFIT TAX OF LEGAL ENTITIES

Article 93. Composition of total annual income
6. The following items are not included into the
composition of total annual income of noncommercial
organizations:
1) membership and entrance fees;
2) free of charge transferred assets, on conditions of
their use for charter purposes;
3) humanitarian assistance and grants, on conditions of
their use for charter purposes.

SECTION VIII
PROFIT TAX

Article 189. Non-taxable incomes
1. Profit tax is not levied on:
3) received by noncommercial organizations:
а) membership and entrance fees;
b) humanitarian assistance and grants, on conditions of
their use for charter purposes;
c) the value of free of charge received assets on
conditions of their use for charter purposes.;
d) payment for services on technical maintenance of
apartment house and their territorial buildings and structures;
e) payment for services on the supply of irrigational water
in the framework of charter activity, provided by associations
of water users for their members.

Benefits provided in part 6 of article 93 of the existing
Tax Code are preserved in article 189 of the new Tax
Code with minor changes.
The provision in paragraph 2 of part 6 of article 93 of the
existing Tax Code “2) free of charge transferred assets, on
conditions of their use for charter purposes”, is replaced
in the new Tax Code by the following provision “(3) the
value of free of charge received assets.
Also two norms, proposed by us, were added:
d) payment for services on technical maintenance of
apartment house and their territorial buildings and
structures;
e) payment for services on the supply of irrigational
water in the framework of charter activity, provided by
associations of water users for their members.

We agree with introduced amendments.

There is no such provision.

Article 106. Tax rate on the profit of legal entity

2. Profit of community of disabled persons of I and II group,
as well as of enterprises of the Kyrgyz community of blind
and deaf people, where disabled, blind and deaf persons shall
compose not less than 50 percent from the total number of
employed, shall be taxed by zero rate. The list of indicated
enterprises shall be determined by the Government of the
Kyrgyz Republic

Article 112. Exemption from tax

1. Profit of public organizations from charitable activity
(profit from other kinds of activity shall be taxed by general
rule) and of corrective labor institutions of the Ministry of
Justice of the Kyrgyz Republic and credit unions shall be
exempt from taxation.

Article 112. Exemption from tax

3. Total annual income of legal entity shall decrease to the
sum of free of charge transferred assets, including cash
means and property (by balance value) to charitable and

Article 198. The value of fixed assets, non-material assets
and inventory holdings

4. Balance value is equated to zero in the following cases:
1) in receiving free of charge transferred objects of social and
cultural function;
2) in receiving by noncommercial organizations property in
the form of:
а) membership and entrance fees;
б) humanitarian assistance and grants;
в) free of charge received assets.

Article 212. Exemption from tax
1. Profit is exempt from taxation of:
2) communities of disabled persons of I and II groups, as well
as organizations of the Kyrgyz community of blind and deaf
people, where disabled persons shall compose not less than 50
percent from the total number of employed and their salary
shall compose the sum, which is not less then 50 percent of
the total fund of labor remuneration. The list of indicated
enterprises shall be determined by the Government of the
Kyrgyz Republic;

Статья 212. Exemption from tax

1. Profit is exempt from taxation of:
1) charitable organizations;

Article 208. Deductions as expenses on charity
Free of charge transferred assets, including cash means and
property (by balance value) to charitable organizations, as
well as to organizations of culture and sports disregarding the
forms of ownership in the period of a year in the amount, not

The given norm is not preserved in the new Tax Code.

The given provision in the new tax Code is better
formulated.

The given provision is preserved in the new Tax Code in
changed version. The new edition is better formulated:
5% was increased to 10%.

budget organizations in the period of a tax year in the
amount, not exceeding 5 percent of taxable income of tax
payer, on conditions that these assets shall not used for the
benefit of the legal entity, which transferred them
Совокупный годовой доход юридического. exceeding 10 percent of taxable income of tax payer, on
conditions that these assets shall not be used for the benefit of
tax payer, who transferred them, shall be subject to deduction
from total annual income.
SECTION V
VALUE ADDED TAX

Article 145. Supplies by noncommercial organizations
Supplies for payment, not exceeding the expenses to carry
out these supplies are considered free from VAT, if it is:
2) supplies of goods, works and services by
noncommercial organizations for social welfare and
protection of children or indigent citizens of advanced;

Article 145. Supplies by noncommercial organizations
Supplies for payment, not exceeding the expenses to carry
out these supplies are considered free from VAT, if it is:
3) supplies by institutions of public health, education,
science, culture and sports;

Article 145. Supplies by noncommercial organizations
Supplies for payment, not exceeding the expenses to carry
out these supplies are considered free from VAT, if it is:
6) supplies of charitable organizations for charitable
purposes.

Article 147. Exemption of import from taxation on VAT
2. Following goods, belongings and other items are exempt
from VAT:
2) supplied as humanitarian assistance, grants in the
order, determined by the Government of the Kyrgyz
Republic; SECTION IX
VALUE ADDED TAX

Article 252. Supplies by noncommercial organizations
Supplies for payment, not exceeding the expenses to carry
out these supplies are considered free from VAT, if it is:
2) supplies of goods, works and services by
noncommercial organizations for social welfare and
protection of children or indigent citizens of advanced;

Article 252. Supplies by noncommercial organizations
Supplies for payment, not exceeding the expenses to carry out
these supplies are considered free from VAT, if it is:
2) in the sphere of education, medicine, science, culture
and sports.

Article 251. Supplies of charitable organizations
Supplies of services by charitable organizations for charitable
purposes in compliance with the legislation of the Kyrgyz
Republic on philanthropy and charitable activity shall be free
from VAT.

Article 257. Exemption of imported goods from VAT

1.Following goods, imported to the territory of the Kyrgyz
Republic are exempt from payment of VAT:
8) as humanitarian assistance, grants in the order, determined
by the Government of the Kyrgyz Republic;

The given norm is preserved in the new Tax Code.

The given norm is preserved in the new Tax Code.

The given norm is preserved in the new Tax Code.

The given norm is preserved in the new Tax Code.

SECTION XII SALES TAX
Article 315. Exemption from payment of sales tax

Sale of goods, accomplishment of works, rendering of
services are exempt from payment of sales tax, if it is carried
out by:
4) charitable organization.

Our proposal to exempt charitable organization from the
new tax “sales tax” was accepted.
SECTION XIII
PROPERTY TAX
Article 330. Tax benefits
1. The following categories of properties are exempt from
taxation:
1) properties of diplomatic representative offices,
counselor institutions of foreign states and representative
offices of international organizations in compliance with
international treaties of the Kyrgyz Republic;
2) properties of first group, taxable value of which does
not exceed 5000 estimate indicators.

Property tax is a new tax. Unfortunately, the new Tax
Code does not provide tax benefits for charitable
organizations.

SECTION VII
LAND TAX
Article 180. Exemption from the payment of land tax
The following categories of lands are free from taxation:
5) lands of organizations of disabled persons, war
participants and similar categories of persons, charitable
organizations and corrective labor institutions of the
Ministry of Justice of the Kyrgyz Republic;
6) lands of the community of blind and deaf people; SECTION XI
LAND TAX
Article 343. Exemption from taxation
If the otherwise is not provided by the present
section, the following categories of lands are free from
taxation:
5) lands of organizations of disabled persons, war
participants and similar categories of persons and lands of the
community of blind and deaf people;

Unfortunately, charitable organizations are excluded from
this list. From now on they will pay land tax.