Kyrgyzstan is considering revising the mechanism for exempting medicines from VAT

The Kyrgyz Cabinet of Ministers has put new rules up for public discussion that determine which medicines and medical supplies will be exempt from VAT.

In short, the authorities want to make the system simpler and clearer so that medicines do not become more expensive due to confusion over the rules.

The current proposal is to update the list of medicines exempt from VAT. It includes hundreds of medicines: from common painkillers and antibiotics to drugs for treating serious and chronic diseases.

The old system, introduced in 2025, turned out to be too complicated. For a medicine to be exempt from tax, it had to match several criteria at once—product code, name, form (e.g., tablets or injections), and dosage.

This caused problems. In particular, the same drug could be imported with VAT one time and without it another. This made it difficult to set a uniform price in pharmacies. As a result, medicines could end up costing more for buyers.

Now they want to simplify the rules. The main change is that medicines will be classified according to the international medical classification (ATC), which takes into account what the drug is used for.

What matters now is not the form or dosage of the drug, but the condition it treats.

Additionally:

• drugs with unproven efficacy have been removed from the list;
• provisions regarding insulin and iron supplements have been clarified;
• important medications have been added, including those for socially significant programs.

Separate rules have been established for raw materials. VAT exemptions will be granted only to companies that actually manufacture medicines and use these materials for their intended purpose.

Authorities expect that the new rules will eliminate confusion at customs, make prices more transparent and stable, and ultimately help reduce the cost of medicines for the public.