The Cabinet of Ministers proposed a procedure for determining the VAT risk base for importers

The Kyrgyz Cabinet of Ministers has submitted for public discussion a comprehensive package of amendments to the resolution regulating the application of Article 307 of the Tax Code. The document aims to tighten control over the undervaluation of imported goods and modernize the risk management system for determining the VAT tax base.

One of the key changes is the redistribution of powers to approve the VAT tax base for goods with risk characteristics. Previously, these functions were assigned to the Ministry of Finance, but now it is proposed that the State Tax Service be appointed as the authorized body.

The amendments introduce a new term, “large taxpayer,” whose status is determined according to a list approved by the Cabinet of Ministers. Such companies are granted a privilege: their VAT liabilities are calculated at the price specified in the contract, without applying the corrective “risk” tax base.

The methodology for calculating the VAT tax base for goods for which the risk management system identifies the likelihood of undervaluation has also been revised. Now the base is determined on the basis of the arithmetic mean price calculated using data for the last nine months — instead of the previous 60 days — with a subsequent 30% reduction in price according to a single formula: “the tax base is equal to the average price minus 30%.”

The formula and the expanded list of data sources are set out in new paragraphs 6 and 8 of the document. The risk management system will now use import and indirect tax payment declarations, electronic invoices, customs declarations, and statistical information, including upon request to the National Statistics Committee, which is required to respond within ten working days.

The explanatory note emphasizes that this model brings the VAT administration system closer to the practices of Kazakhstan and Russia, where digital risk analysis is a basic element of tax control.

The procedure for interaction between importers and tax authorities has also been significantly revised:

• the tax service has the right to request confirmation of the value from the competent authority of the exporting country;
• if no response is received within 90 days, a risk-based adjustment is applied with the accrual of interest;
• the importer may request that the contract price be taken into account by submitting an application to the tax authority;
• confirmation from the foreign tax authority allows the contract price to be applied for six months.

These mechanisms are enshrined in new paragraphs 19–22 of the Procedure.

The Cabinet of Ministers also clarified the procedure for revising the list of goods with risk characteristics. Now, changes can be made monthly based on applications from companies, business associations, or government agencies. The previous mechanism provided for a fixed quarterly update of the list.