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IBC: With government pressure on business, bona fide taxpayers suffer

IBC
June 4, 2020

“Instead of promoting new development proposals, we again have to deal with business-damaging initiatives, said IBC Executive Director Askar Sydykov at a meeting of the Business Development and Investment Council under the Government of the Kyrgyz Republic on June 3, 2020.

With any pressure from government agencies on business, bona fide taxpayers suffer.

Business does not understand the position of tax authorities and the government regarding the additional assessment of income tax of non-residents. This affected the telecommunications market and the banking sector – the companies have to pay millions of dollars in tax audits.

“And the additional charge for increasing the banks’ authorized capital due to retained earnings is like an investment tax,” the IBC head expressed the opinion of the business.

How to restore the economy and think about long-term measures with such an attitude of the tax authorities and the government towards business?

Real steps are needed to improve the investment climate, and not just regular action plans. “If we do not protect the existing business now, then there is no point in talking about attracting new investors,” concluded the IBC head.

The business has not yet received clarification on its proposal for the first and second anti-crisis plans of the government.

“Of course, in this way the state can replenish the budget in the short term, but it’s worth considering that tomorrow companies can curtail multi-million dollar development plans or even leave the local market,” he said.

In a pandemic, it is especially important to reduce state regulation and any bureaucracy (permission, coordination, etc.).

Business has not yet seen real reforms, although the law has given the government unprecedented authority. Concessional lending has not yet begun under the second package, and there is no complete information about these loans.

Businesses need out-of-the-box algorithms in case further restrictive measures are introduced related to the coronavirus pandemic.

The Council members recommended that the Economy Ministry within a month, together with interested ministries, departments and business associations, consider the proposals of the business community for anti-crisis plans.

It was decided to draft a package of additional measures to restore economic activity and support entrepreneurship and s it to the Government Office.