Legal News

Legal Grata International
(May 2020)

Table of contents:

  • On approval of the Program “On financing the business entities”
  • On suspension of the initiation of bankruptcy proceedings against business entities
  • On measures for additional support to businesses in connection with the spread of coronavirus infection COVID-19
  • On approval of the procedure for processing and application of an invoice as an electronic document
  • On introducing amendments to the Resolution of the Government of the Kyrgyz Republic “On streamlining trade activities in the Kyrgyz Republic”
  • On issues related to the selection and nomination of candidates by state bodies for the positions of members of management bodies of business entities with state participation

On amendments to the Law “On public procurement”

President Sooronbai Zheenbekov signed the Law on Amendments to the Law of the Kyrgyz Republic on Public Procurement.

The Law was adopted by the Jogorku Kenesh of the Kyrgyz Republic on April 15, 2020.

The Law introduces changes to Article 4 (Benefits provided to domestic suppliers (contractors)) and Article 21 (Purchases by direct contracting) of the Law of the Kyrgyz Republic No. 72 of 3 April 2015 on Public Procurement in order to provide state support to domestic producers and facilitating implementation of public procurement in times of emergency and state of emergency.

The Law comes into force from the date of its official publication.

On introducing amendments to some legislative acts of the Kyrgyz Republic on issues of stabilization of socio-economic situation due to force majeure circumstances

The President of the Kyrgyz Republic, Sooronbai Zheenbekov, signed the Law of the Kyrgyz Republic on Amendments to Some Legislative Acts of the Kyrgyz Republic on Stabilization of the Social and Economic Situation due to Force Majeure Circumstances.

Thus, amendments have been made to a number of legislative acts concerning the procedure for fulfilling financial obligations in the event of force majeure circumstances.

In particular, according to the amendments made to the Tax Code, the Kyrgyz Government has the right to make decisions for a certain period of time in the event of force majeure circumstances:

– on granting a deferral or installment payment for the amount of tax debts resulting from the force majeure without providing a bank guarantee;

– on changing tax rates within the limits of rates provided by the tax legislation of the Kyrgyz Republic;

– prolongation of tax reporting terms, except for tax reporting on indirect taxes when importing goods into the Kyrgyz Republic from the territories of the Eurasian Economic Union member states;

– non-application of tax sanctions and penalties for late performance of tax liabilities.

The deadline for submission of a single tax return for 2019 by individuals and individual entrepreneurs is 1 April 2021.

It is established that from April 1 to October 1, 2020, taxpayers may submit applications for deferrals or installments on the amount of tax arrears formed as a result of force majeure without presenting documents on bank guarantees for a period not exceeding 1 year.

The deadline for submitting tax reports, except for tax reports on indirect taxes when importing goods on the territory of the Kyrgyz Republic from the territories of the EAEU Member States, is extended for business entities until July 1, 2020.

Tax sanctions and penalties for late fulfillment of tax obligations by a taxpayer due to force majeure circumstances for the tax periods from March to June 2020 are not applied.

Also in case of force majeure circumstances the Government of the Kyrgyz Republic is entitled to make a decision on exemption of individual entrepreneurs from paying insurance premiums for a certain period of time.

The Law will come into force on April 1, 2020.

On introduction of simplified taxation system based on retail sales tax

The Tax Code of the Kyrgyz Republic introduced a new tax regime – a simplified system of taxation based on retail sales tax, according to which an individual taxpayer pays the established taxes, except for income tax and sales tax.

The tax base is revenue from sales of goods, services and works.

The tax rate is established in differentiated amounts depending on the year of activity since the day of application of this tax regime.

The procedure for application, terms and conditions for transition to the simplified tax system based on the retail sales tax are determined by the Government of the Kyrgyz Republic.

The Law comes into force after fifteen days from the date of official publication, except for some provisions that come into force on January 1, 2021.

On additional temporary measures of regulation of commercial banks activity in the Kyrgyz Republic

In connection with the situation created due to the COVID-19 pandemic, in order to preserve stability in the banking and financial systems of the country and protect the rights of consumers of banking services, as well as to mitigate certain requirements of the National Bank of the Kyrgyz Republic, the following additional temporary measures were taken to regulate the activities of commercial banks of the Kyrgyz Republic:

1) when granting credits, banks have the right not to require from borrowers a document of the established form issued by the authorized body confirming the fact of state registration (re-registration) (certificate) as an individual entrepreneur or a copy of the document confirming the fact of entrepreneurial activity without state registration (patent) stipulated by the legislation;

2) banks have the right not to require submission by individual entrepreneurs of a certificate of the tax authority required by the legislation which confirms the fact of tax registration of a taxpayer upon opening of an account;

3) banks participating in the programs on issuance of preferential unsecured loans for small and medium business in the framework of resumption of economic activity of entrepreneurship entities are entitled not to require submission by legal entities and individual entrepreneurs (residents) to the bank of the tax service certificate on the fact of tax registration of the taxpayer when opening an account for the purposes of obtaining a loan, as per the applicable legislation;

4) banks:

  1. a) banks shall monitor loans with departure:

– at least once every six months for loans amount of which exceeds one percent of the net total capital of the bank;

– at least once a year for credits exceeding KGS 10,000,000.

For consumer loans, payment monitoring shall be performed, which implies analysis on the basis of loan payments made;

  1. b) have the right not to conduct monitoring of movable property of the borrowers, the requirement for which is established by legislation;
  2. c) has the right to extend a consumer loan to a borrower in national currency only if the ratio of planned monthly loan payments (principal and interest payments) to the average monthly aggregate income of the borrower is:

– not more than 40%, if the average monthly comprehensive income is less than 500 estimated indicators;

– not more than 50% if the average monthly comprehensive income is between 500 and 2000 estimated indicators;

– not more than 60 per cent if the average monthly comprehensive income is more than 2000 estimated indicators.

The Resolution shall come into effect from the date of its official publication and shall remain in effect until the respective decision of the Board of the National Bank of the Kyrgyz Republic is made.

On some issues in the field of cyber security of the Kyrgyz Republic

In order to improve the national infrastructure for coordination and ensuring cybersecurity, the Government of the Kyrgyz Republic by its Resolution № 266 dated 21 May 2020 approved the Regulations on the Coordination Center for ensuring cybersecurity of the State National Security Committee of the Kyrgyz Republic and determined the State National Security Committee of the Kyrgyz Republic as the authorized state body in the field of cybersecurity of the Kyrgyz Republic.

The present resolution comes into force after ten days from the date of official publication.

On changes in the terms of holding annual general meetings of shareholders

Due to introduction of an emergency situation and state of emergency on the territory of certain administrative and territorial units of the Kyrgyz Republic, the Government of the Kyrgyz Republic by its Resolution № 143-r dated 24 April 2020 established:

1) The deadline for holding general annual meetings of shareholders following the results of 2019 – until September 1, 2020;

2) the term of publication of the annual report on financial and economic activity of the open joint stock company with the number of shareholders more than 500, or publicly placed at least 1 issue of securities – within 2 months from the date of the annual meeting of shareholders on the results of 2019, but not later than November 1, 2020.

The Resolution came into force from the signing date.

On the order of identification and verification of clients in remote mode

As part of the measures to reduce epidemiological threats and in order to increase the availability of financial services, on May 13, 2020 the Board of the National Bank of the Kyrgyz Republic adopted a resolution “On the procedure for identification and verification of customers in a remote mode”.

In accordance with this resolution, minimum requirements for remote identification and verification of clients for provision of banking services are determined.

In addition to the Resolution, “Analysis of risks of money laundering and terrorism financing in conducting due diligence of customers in remote service” prepared with the assistance of the International Financial Corporation (IFC) will be sent to commercial banks as methodological recommendations on organization of due diligence of customers.

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