ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of March 19, 2012 No. 184

About approval of the Development strategy of the State Tax Administration under the Government of the Kyrgyz Republic for 2012-2014

For the purpose of reforming and upgrade of Tax Service, ensuring increase in efficiency of tax administration in general taking into account respect for balance between need of increase in collecting of taxes and decrease in administrative burden of the taxpayer the Government of the Kyrgyz Republic decides:

1. Approve:

- The development strategy of the State Tax Administration under the Government of the Kyrgyz Republic for 2012-2014 (further - Strategy) according to appendix 1;

- The plan of strategy implementation (further - the Actions plan) according to appendix 2.

2. To the ministries, administrative departments to take exhaustive measures for implementation of the Actions plan.

3. To the State Tax Service under the Government of the Kyrgyz Republic following the results of every half-year, no later than August 1 and on February 1 to submit the generalized report on the strategy implementation course in Government office of the Kyrgyz Republic.

4. To impose control of execution of this resolution on department of finance of Government office of the Kyrgyz Republic.

5. This resolution becomes effective from the date of official publication.

Appendix 1

The development strategy of the State Tax Administration under the Government of the Kyrgyz Republic for 2012-2014

I. Introduction

This development strategy of the State Tax Administration under the Government of the Kyrgyz Republic (further - Strategy) is the document determining vision, mission, strategic objectives of development of the State Tax Administration under the Government of the Kyrgyz Republic (further - GNS) for 2012-2014, the main objectives on their achievement, and also measures and mechanisms of implementation of the tasks.

Development of this Strategy is caused by the Medium-term development program of the Kyrgyz Republic for 2012-2014 approved by the order of the Government of the Kyrgyz Republic of September 8, 2011 No. 540, need of determination of the main directions of reforming of GNS for the medium-term period, accurate priorities of development, review and implementation of essentially new, modern approaches and methods in tax administration and also developments of specific actions for realization of the tasks directed to achievement of specific results.

The methodology of development of Strategy includes two stages: analytical and stage of planning.

The analytical stage assumes the analysis of problems, purposes and tasks during which the state of affairs in the sphere of tax administration, activities of tax authorities for determination of vision of future GNS, priorities of development and ways of achievement of effective objectives was studied.

The stage of planning includes development of structure of Strategy, planning of actions, resources and costs, development of the system of monitoring and assessment.

II. Current status, mission and vision of GNS

For years of independence in the country the measures directed to reforming of system of tax administration were taken. During reforms since January 1, 2009 new edition of the Tax code of the Kyrgyz Republic is enacted (further - the Tax code).

The tax code provides the solution of the major tasks in the sphere of administration of taxes. One of which was creation of the legal basis for high-quality improvement of tax administration, decrease in unfairly high administrative burden, creating favorable conditions for business through stimulation of activities of fair taxpayers. New edition of the Tax code is directed to harmonization of the tax legislation with other laws of the republic, elimination of contradictions and gaps in regulatory legal acts.

In subsequent, the changes and additions directed to enhancement of its regulations are made to the tax legislation. Consideration of the made changes and additions was performed during their discussion with business community and experts, including consideration of relevant proposals on permanent joint expert and public platforms.

In general in the Tax code the legal basis for creation of the modern effective taxation system is laid.

In parallel with reform of the tax legislation there was process of upgrade of activities of the most Tax Service. According to the tasks provided in the Strategy of development for the country for 2007-2010 approved by the Presidential decree of the Kyrgyz Republic of May 16, 2007 No. 249, in case of technical and financial support of the Asian Development Bank (ADB) since 2008 in system of Tax Service of the republic project implementation "Reforming and upgrade of tax administration" began.

Within the first stage infrastructure of tax authorities is partially updated, transformations in organizational structure as a result of which the structure and working processes are built by the functional principle are performed. In separate pilot divisions the corresponding infrastructure is created and mechanisms of work with taxpayers by the principle of "single window" are implemented, the Training center for training of staff of GNS and taxpayers is created. Since August, 2010 development of the Information system of tax administration of the country (ISNAK) which step-by-step implementation is planned to be performed in 2012 is begun. In the city of Bishkek and Chuy Region the system of electronic submission of tax reports is started.

In case of technical support of the International Finance Corporation (IFC) the automated planning system, appointments and processings of results of exit tax audits based on mechanisms of risk assessment of failure to pay taxes is developed and implemented in large tax divisions.

In general measures for reforming of system of tax administration positively affected results of activities of fiscal body. So, within the last three years the stable growth of receipts of the taxes and payments collected by tax authorities is observed. The amount of the fiscal duties for these years increased with 21, 1 billion som - in 2009 to 30, 3 billion som - in 2011, on percent point 0,9 (with 10,7 up to % 11,6) the indicator of specific weight of the tax income in GDP increased. Positive dynamics of growth of indicator of number of active business entities is noted. When reducing number of a carried-out tax audits of hozsubjekt the receipt indicator in the budget of the amounts of the taxes and payments revealed by results of such checks grows.

At the same time, the carried-out analysis showed that despite the made progress, unresolved are some problems of tax administration mainly connected with insufficient efficiency of activities of tax authorities, availability of obsolete, inefficient forms and instruments of administration.

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