Kyrgyz Minister Calls To Abolish Tax Clearance Certificate

Abolishing the burdensome requirement for a tax clearance certificate during sales transactions could reshape the business landscape in Kyrgyzstan, according to the country’s Minister of Justice, Ayaz Baetov. On March 25, 2025, Baetov emphasized the urgent need for the government to pursue a less bureaucratic approach to public service, highlighting how current practices hinder entrepreneurial activities.

Baetov addressed various media outlets, stating that the certification process is a direct example of bureaucratic red tape that should be eliminated. He lamented the past processes that required prospective business owners to navigate a maze of governmental departments to start a legal entity—first attending the Ministry of Justice, followed by visits to the State Tax Service, the Social Fund, and finally arriving at the bank.

“Previously, to open a legal entity, one had to go to the Ministry of Justice, then to the State Tax Service, then to the Social Fund, and then to the bank; now you come to the Ministry of Justice and go straight to the bank,” he explained, noting that improvements have already been made in streamlining these processes.

In advocating for change, Baetov insisted that government bodies should not require documents already possessed by other agencies. He stated, “For this, it is necessary to synchronize the databases between departments. If the databases are not connected, then it is necessary to designate synchronization deadlines to eliminate unnecessary procedures.”

The Minister further elaborated on the significant challenges faced by individual entrepreneurs and legal entities in Kyrgyzstan. With the ease of opening a business now simplified to just two steps, many find themselves facing hurdles when it comes to closing or liquidating operations. Baetov identified this imbalance as a major issue pointing to the fact that 94% of registered legal entities in the country are no longer in operation.

“The ease of opening an individual entrepreneur or legal entity and the difficulty of closing them have led to an imbalance, with 94% of legal entities in the country not operating,” Baetov asserted. He illustrated the issue further by highlighting that while it takes approximately three hours to open a business, liquidation can take anywhere from six months to a year.

This stark imbalance in the business lifecycle has raised concerns among regulators about the sustainability of entrepreneurship within the framework of current laws. Baetov disclosed that he and his team have attempted to amend the law or initiate regulatory actions twice in the last three years without success. Yet, the Minister remains optimistic about the upcoming meeting scheduled for March 26, 2025.

During this meeting, a special commission will consider a proposed package aimed at simplifying the liquidation processes for both legal entities and individual entrepreneurs. The anticipated reforms are expected to provide a streamlined approach to the termination of operations, signifying a positive step in reducing the bureaucratic barriers currently faced by business owners.

Baetov described the need for two separate normative legal acts: one for the simplified liquidation of long-dormant legal entities, and a second for those that need to be closed presently. This legislative change is envisioned to alleviate the cumbersome processes that currently plague business closures.

After highlighting the pressing issues surrounding business operations, Baetov noted that, according to the latest statistics, out of over 180,000 registered legal entities in Kyrgyzstan, fewer than 10,000 are actively conducting business. This statistic underlines the disheartening reality of the entrepreneurial ecosystem within the country.

The Minister's remarks reflect a growing recognition of the need for systemic reforms to enhance business climate conditions. An active move towards easing regulatory burdens could encourage more business activities and promote economic growth in Kyrgyzstan.

The effort to rid the country's bureaucratic processes of superfluous requirements will not only serve entrepreneurs but could also foster a more conducive environment for economic development. As discussions continue and reforms are proposed, business advocates throughout Kyrgyzstan are watching closely, hopeful for changes that might pave the way for a more vibrant economic future.