Will Businesses “Flee” from Kazakhstan to Kyrgyzstan?

Starting January 1, 2026, Kazakhstan will introduce a new Tax Code. It will bring numerous changes for businesses, including an increase in the VAT rate from 12% to 16%, higher excise taxes on tobacco, alcohol, and energy drinks, and much more. Because of this, there is a risk that many small and medium-sized enterprises may either close down or “relocate” to Kyrgyzstan. “Indeed, we have some of the lowest taxes in the Eurasian Economic Union. There are different taxation regimes. For e-commerce, it’s 2% plus social fund contributions. For trade, one can purchase a patent. For other types of activities, it’s 4% for non-cash payments, 6% for cash payments, and 8% when using cash registers,” economist Iskender Sharsheev told Vesti.kg. For this reason, many companies from Russia and other countries have already opened their representative offices in Kyrgyzstan. “The only obstacles sometimes come from local restrictions, which can create barriers to their continued operations. However, it’s important to remember that these measures are aimed at protecting domestic markets and national trade, and at preventing risks such as double taxation. Still, the relocation of part of the business is quite possible,” he noted. It should be added that Kyrgyzstan is also planning changes to its taxation system. In particular, there are proposals to raise excise taxes on tobacco products, alcohol, energy drinks, and soft drinks — to encourage citizens to consume less of them. Learn more: “Will Businesses ‘Flee’ from Kazakhstan to Kyrgyzstan?” – Vesti.kg