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Kyrgyzstan Review, 10 years ago




[21.02.23] A New Way to Rid Kyrgyzstani of Money Real Estate Tax

Real estate tax will be levied depending on the market value of property. Anything under 5 thousand dollars is waved from paying the tax. Mostly these are 1 and 2-room apartments. The owner of a 10-thousand dollar house will pay tax of the remaining 5 thousand dollars. This is where we encounter the first problem. There are no independent and skilled specialists to evaluate property in the Republic. That is, there are just a few, qualified to perform the evaluation, which sets the stage for corruption.
 
Tax payment schedule has not been settled either and it is not clear whether the tax is a one-time payment due once a year or the burden will be distributed between several payment periods
 
...Minimum rate will also be set for the large industrial enterprises. Besides, apartments, used for offices will be subject to higher tax rate
 
M. Sultanov, Head of LAJK Commission on budget and finance:
 
- After VAT on output of major agricultural producers has been introduced, it wont be a surprise if the real estate tax is enforced in the 3rd quarter of this year. It is practically impossible to avoid paying it, especially for those who truly do own luxurious houses and apartments. This will be a good contribution to budget revenues. However, before the law is enacted, its mechanism should be carefully worked out.
 
First, the minimum market value should vary through out the Republic. For Bishkek it should be about 500-600 thousand soms approximate value of a 3-room apartment. Many pensioners live in such apartments ever since the Soviet times and it would be unfair to deprive them of their living quarters. Besides, the value should be different for the other cities of the republic. Otherwise, residents of the capital will be mostly the ones to pay the new tax. Housing prices are higher here in the capital, but it doesnt mean that people are that much better off.
 
Local budgets are the ones to collect the proceeds. And the money levied is to be used solely for local purposes. Besides, local keneshes should be able to set the rate independently so that the parliament only sets the upper limits.
 
A. Japarov, Head of LAJK Commission on tax and custom duties:
 
- We have to introduce new taxes because of the last year treaties with the IMF and Paris Club on restructuring of our foreign debt. According to those treaties, if Kyrgyzstan proves its ability to generate budget funds independently, about 500 mln dollars of our debt might be written off in 2004-2005.
 
So VAT on agricultural products and real estate tax are rather a political gesture than an economic measure
 
Unfortunately, not everything is smooth in terms of restructuring the foreign debt. It is only the interest payment that is being written off, which will ease the situation in the near future. However, the total sum of the borrowed funds is still looming in the future and will have to be repaid one day.
 

"Gazeta KP in Kyrgyzstan, February 21, 2003


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