KYRGYZSTAN TODAY Policy briefs on - Department of Geography

2. Tax administration. Tax administration reform is needed to balance the rights of
tax payers and tax authorities, to decrease corruption in tax authorities, and to increase
the efficiency of fiscal officers. The following measures should be taken to reorganize
the Tax Service:
• optimize organizational structure and functions;
• introduce modern information technologies;
• exclude conditions for corruption in fiscal bodies by reducing their contacts
with tax payers through the “one window” approach for registering entities and
submitting their tax reports;
• submit tax reports through electronic communication channels;
• reduce the number of tax checks as a way to assess risks of tax non-payments by
operating entities;
• optimize the system so it is also applied to large taxpayers.
3. Frequent and unreasonable checks. Many potential advantages of a market
economy have not been realized because enterprises that engage in commercial activities
are exposed to repeated checks, and face many requirements from various authorities,
all of whom issue more than one check for the same aspects of an enterprise’s activities.
Numerous and inconsistent tax instructions and rules are subject to constant change.
Discrepancies of the current Tax Code provides tax inspectors, auditors, and tax police
officers with the opportunity to “hunt for rent” from taxpayers.
4. Imperfections of the legislative and legal normative bases. The newly-developed
Tax Code has not been adopted for more than two years. Quite often, statutory acts
contradict each other or are duplicated. In general, the legislation of the Kyrgyz
Republic complies with principles of market economy and the economic strategy, which
the Government of the Kyrgyz Republic has developed. However, the implementation
process complicates more than promotes the development of a market economy. The
key problem in promoting the rule of law is the excessive intervention from the State in
private business, as well as failure to observe the law.
5. Instability and unpredictability of the business regulation policy. There
is low transparency in the ways that the State makes its decisions on legal and
economic regulations. These impact the market environment and the rights and
interests of businessmen, on the one hand, and the complexity of permit and license
procedures and imperfection of business tax administration, on the other hand. The
resulting uncertainty makes business activities more complicated and increases the
costs. Serious obstacles arise as state bodies duplicate their activities while granting
permissions.
During recent years, the scope of paid services that public authorities render has
constantly increased. In reality, public authorities make their own business while
rendering paid services. In addition, state structures have the right to establish norms,
and then control on their own their performance; this leads to conflicts of interests.
Officials are always developing laws that maintain their own supervisory functions and,
thus, justify the existence of the public authorities themselves. That was the way many
departmental normative legal provisions had been accepted, and are now accepted.
Legal provisions have been developed in interest of the state structures managed by
the authors of these projects and then the same state bodies and structures supervise
and render the newly-introduced paid services. The register of permission documents
issued by state bodies amounts to around 100 different permit names. The actual
quantity of all departmental permissive documents, sublicenses, confirmation papers,
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