Tax breaks cost Kyrgyzstan tens of billions of KGS. Who are the beneficiaries?

Every year, Kyrgyzstan sacrifices tens of billions of soms to support business and socially significant sectors through tax breaks. In 2024, the amount of tax breaks exceeded 63.9 billion KGS, or 4.2% of GDP. This is comparable to entire sections of the state budget. For example, this year's republican budget expenditure on healthcare has been approved at 41.9 billion KGS.

Moreover, the picture repeats itself year after year. In 2022, the benefits cost the treasury 60.1 billion KGS, and in 2023, 53.5 billion.

More than half of all benefits are VAT exemptions, and over 20% are income tax benefits. The actual recipients of tax breaks are:

• farmers, who receive breaks on fertilisers, seeds and breeding animals;
• energy companies — a five-year tax exemption for renewable energy projects;
• private schools and health resorts — income and property tax breaks;
• healthcare — VAT exemption for medicines, vaccines and prosthetics;
• bank depositors — exemption from interest on deposits.

In essence, tax breaks are a state investment in supporting priority areas. However, a logical question arises: how effectively does this money contribute to the country's development? To answer this, the government has introduced an evaluation mechanism — the list of benefits is regularly reviewed. In 2024, for example, nine benefits were extended until 2030.

These include:

• income tax exemption for private schools;
• tax breaks for renewable energy producers;
• income tax exemption for agricultural trade and logistics centres;
• benefits for the supply of mineral fertilisers, breeding animals and seed material;
• VAT exemption for humanitarian aid.

The list of extended benefits also includes benefits for bank depositors, machine and tractor stations, suppliers of prosthetic and orthopaedic devices and medicines.