Kyrgyzstan is rapidly becoming a magnet for IT companies and startups, thanks to its favorable business environment and innovative initiatives. Here's more about what foreign companies need to know about the local conditions.
Chubak Temirov, Deputy Director, High Technology Park of the Kyrgyz Republic
About High Technology Park of the Kyrgyz Republic
The High Technology Park of the Kyrgyz Republic is a zone with a special tax and legal regime created in 2011 to stimulate the development of the IT sector in Kyrgyzstan. The HTP's mission is to create favorable conditions for the development of IT companies.
HTP activities include providing residents with preferential taxation, supporting IT infrastructure, promoting the export of IT services, and conducting educational programs.
The High Technology Park regime is a special legal and tax regime applicable to the residents of the High Technology Park, which establishes tax exemptions and benefits on insurance contributions in accordance with the legislation of the Kyrgyz Republic. HTP residents have following tax preferences:
Sales Tax: 0%.
Profit Tax: 0%.
Value Added Tax: 0%.
Personal Income Tax: 5%.
Contribution to HTP: 1%.
Conditions in Kyrgyzstan for the establishment of foreign companies
In general, a foreign investor does not need to go through a large number of bureaucratic procedures to open a company in Kyrgyzstan. It is sufficient to have a residence registration and obtain a Personal Identification Number — PIN for a legal entity, after which it is possible to register the company in the usual way as Kyrgyz citizens.
There are a few government programs. One of them is the Digital Nomad program launched in early 2022 to attract foreign companies and individual entrepreneurs operating in the field of information and communication technologies, development of software products.
Holders of this status receive the following benefits:
— exemption from the obligation to register for residence in the territory of the Kyrgyz Republic
— exemption from the obligation to obtain a work permit
— automatic issuance of a Personal Identification Number — PIN
— the right to carry out entrepreneurial activity or operate as a legal entity
— ability to open and use bank accounts without registration at the place of residence.
Obtaining this status is free of charge and is issued for a year with the possibility of extension. Citizens of the Eurasian Economic Union and citizens of Azerbaijan, USA, Japan, and Germany in the near future.
Why Kyrgyzstan attracts foreign companies
Kyrgyzstan offers many unique advantages and great potential for foreign companies. Below are the main points of interest:
1. Efficient and stable electricity options. Electricity costs 0.03 per kWh, and renewable electricity is inexpensive in Kyrgyzstan. The country is an ideal location for businesses needing reliable and affordable power sources, such as data centers, IT companies, and manufacturing facilities.
2. Reliable and high-speed internet. Internet infrastructure in Kyrgyzstan is robust, offering fast and dependable connectivity crucial for digital companies to communicate effectively with customers.
3. Skilled workforce and career opportunities. Kyrgyzstan boasts a highly skilled labor force with ample opportunities for professional development. The country is actively developing educational programs and advanced training courses in IT, business, and other industries.
4. Visa-free entry to more than 60 countries. Kyrgyzstan facilitates business and international partnerships by offering visa-free entry to citizens of over 60 countries.
5. Fast company registration. Company registration is expedited, with foreign citizens included in the process in just three days. This streamlined approach minimizes bureaucratic hurdles, making it quick and straightforward to start a business.
How High Technology Park of Kyrgyzstan assists foreign companies
The High Technology Park of Kyrgyzstan provides a wide range of services and support to foreign companies, helping them to adapt and develop in the country's business environment. HTP offers substantial support to its residents, as described below:
1. Information and counseling assistance. HTP provides comprehensive information support, including advice on business processes, assistance in creating strategies, and conducting market research.
2. Advice on registration and compliance with local tax and labor laws. HTP assists in understanding the specifics of local tax and labor laws, and advises on registration and compliance with statutory requirements.
3. Navigating local adaptation and business support. HTP helps companies in adapting to the business environment in Kyrgyzstan by facilitating meetings, fostering relationships with local business owners and potential partners.
4. Participation in international forums and exhibitions. HTP facilitates participation in international forums and exhibitions, which are crucial for showcasing progress, networking with investors and partners, and staying updated on global market trends.
5. Business Development Programs. HTP creates acceleration programs that will help companies to improve their business processes, to do the market-fit and scale.
What else foreign companies should know about setting up in Kyrgyzstan
If you are planning to start a business in Kyrgyzstan, it is important to consider several key aspects related to taxation, labor laws, the labor market, and other factors. Here is what you should know:
1. Business registration. Registering a business in Kyrgyzstan takes three days. You need to register with the Ministry of Justice, obtain permits and licenses — if required, and register with the tax service.
2. Taxation. Kyrgyzstan has a progressive taxation scale for individuals and a flat tax rate for small businesses. VAT is 12%, and the profit tax rate is 10%. Foreign companies can benefit from tax incentives when investing in priority sectors.
3. Labor laws. The Labor Code of the Kyrgyz Republic governs the relationship between employers and employees, covering aspects such as hiring, dismissal, wages, vacation, and working hours. Employers are required to conclude labor contracts and ensure safe working conditions.
4. Labor market. Kyrgyzstan has a young and relatively inexpensive labor market. However, there is a shortage of highly qualified specialists, which may necessitate additional investments in training and staff development.
5. Currency regulation. Kyrgyzstan has a free regime of currency regulation, allowing for international currency transactions. However, opening a bank account for a foreign company may require additional documentation.
6. Cultural and linguistic considerations. Understanding local cultural and linguistic nuances can significantly facilitate and enhance your business operations.
