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Research by Country/Region January 22, 2018  

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A. Is this country a member of the Information Technology Agreement?

B. Customs documentation requirements for IT products

C. Software: duties and taxes, updates, licenses, electronically delivered

D. IT services: tax treatment and other regulations

E. Refurbished, used, or repaired computer equipment imports

Signatories to the Information Technology Agreement (ITA) have eliminated their import duties on a wide range of information technology products, including software and computer hardware. For more information on the ITA, and exact tariff elimination schedules of signatories, click here.
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What are the documentation requirements for the physical import of software? For other information technology products?
The documents necessary for customs registration and physical import of software are:
- cargo customs declaration;
- cargo documents (waybills, packing sheets, customs declaration of departure country or transit country, etc.);
- contract;
- invoice;
- certificate of conformance;
- certificate of origin;
- letter/power of attorney confirming the authority of the individual completing customs registration.

Customs officials also require presentation of information about the authenticity of the business:
- corporate charter and other documents;
- registration certificate;
- reference from bank about the availability of a settlement account;
- reference from the territorial tax inspection.

The specified list is not exhaustive. It can be supplemented or changed depending on the conditions and character of the transaction, circumstances of delivery, kind of goods and customs regime.

With the aim of protecting software as an object of intellectual property, the legal owner or his representative, having reason to believe that during the transit of goods through a customs post or upon completion of other actions involving customs authorities, the rights of the legal owner of an intellectual property object are violated or could be violated, has a right to submit a statement to the Customs Service Department of the Revenue Committee of the Ministry of Finance of the Kyrgyz Republic. The statement must contain the following data:
- a claim by the legal owner for protection of his rights in intellectual property;
- complete data about the legal owner;
- information about each protected software program; about the term during which the owner will need assistance from customs officials to protect his rights; a description of software (for identification) and other information, permitting identification of counterfeit merchandise;
- the obligation of the legal owner to pay compensation for harm to the declarant and other persons, and also expenses of customs officials, which could arise as a result of holding allegedly infringing goods, in cases where it is established that the goods are not infringing.

Documents confirming the existence and ownership of an intellectual property right (certificate, patent, license agreement or other documents in accordance with the legislation of the Kyrgyz Republic on intellectual property), in case of need, power of attorney of applicant given by legal owner, and also other documents determined by the Central Customs body of the Kyrgyz Republic must be attached to the statement.

If possible, a sample of the goods (the medium) containing the intellectual property object should be presented simultaneously with the submission of statement.

On occasion, the Customs Service can decide that it is not able to provide protection of an intellectual property right. In such cases, a decision is made not to include the software on the Register of Software Intellectual Property Objects. The customs service notifies an applicant of the decision, together with the reasons for such decision.
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Are duties assessed on the intellectual property of the software or on the medium on which is it presented?
According to the regulation "On the method of customs valuation of imports to the Kyrgyz Republic," authorized by the decree dated 08.29.1998 N15-12/372 of the State Customs Committee of the Kyrgyz Republic, upon crossing the border, Customs Service employees take into account only the cost of the software’s medium (CD, diskettes, cartridges). The value of the content contained on the medium (data, software, instructions, etc.) is not included in customs valuation provided that it is segregated from the cost of a medium. For customs purposes, a medium must not include integrated circuits, semiconductors and other products, connecting such microcircuits and devices.

Are taxes assessed on the intellectual property of the software or on the medium on which is it presented?
On the medium-- see answer above.

Is customized software treated differently than packaged software?
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What are the customs duties and tax implications for software sold with updates when the full sales price, including cost of updates, is shown on the original commercial invoice? Are duties and taxes paid on that amount? What happens when the updates are sent at a later date? Are duties/taxes applied again? If so, based on what value? How should information presented on the commercial invoice for the original and subsequent shipments to avoid paying duties/taxes more than once on a single sale?
A commercial invoice is filled out at the discretion of the seller for shipment of original or update software.
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Are software licenses classified in Harmonized System 4907?
Software licenses are not classified in Harmonized System 4907.

Are import duties/taxes applied? If so, on what cost/price base are they levied?
Customs duties and taxes are not applied to the import of software licenses.

Are withholding or other additional taxes applied on software licenses? If yes, how?

If a U.S. license agreement is included in the packaging or is part of the installation/registration of shrink-wrapped software imported from the United States, would that agreement be binding on consumers in your market? If so, would U.S. or local laws pertain?
If a U.S. license agreement is already included in a software package or is a part of the installation/registration of shrink wrapped software imported from the U.S. and ready for use, then the agreement will be obligatory for consumers in the Kyrgyz Republic market. In this instance U.S. laws have force, not local laws.
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Are taxes applied to software delivered to the end-user over the Internet? If so, on what value?
There is no control over software delivered to the end-user over the Internet. The Revenue Committee does not charge import taxes (VAT, profit tax, etc.) on products delivered over the Internet.

Would the situation be different if this software were instead delivered to a distributor who has a license to produce (replicate) and sell the software?
If software is delivered to a distributor who has a license to produce (replicate) and sell software, the tax situation changes since the distributor has the possibility to protect licensed software, as an intellectual property object, by interaction and cooperation with the State Agency on Protection of Intellectual Property, and the Revenue Committee of the Ministry of Finance.

What are the documentation requirements for the electronically delivered import of digitized products (i.e. software, movie downloads) over the Internet or other networks?
There is no specific list of documents required for the electronically delivered import of digital products over the Internet, since there is no state control over the products delivered through Internet and other networks.

Must an electronically delivered software import be accompanied by a physical shipment of the same product?
Kyrgyz legislation does not require physical shipment of electronically delivered software.
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Are services (i.e. training, set-up, etc) relating to the sale of software taxed? If so, at what rate and based on what value?
Services relating to the sale of software are taxed when these services are provided directly on the territory of the Kyrgyz Republic. The procedure for levying taxes on services related to the sale of software on the territory of the Kyrgyz Republic depends on:
- residence
- whether the service provider is an individual or a legal entity. An individual is a person providing services in his/her own name (and not on behalf of a business) without regard to foreign citizenship.

It should be noted that a non-resident taxpayer is a person registered under the laws of another country, but having non-continuous (short-term) income from sources located on the territory of the Kyrgyz Republic. Moreover, temporarily registered persons automatically become residents after 183 days of staying in the Kyrgyz Republic (during a calendar year).

Since non-residents become taxpayers upon receipt of income from sources located in the Kyrgyz Republic, they are obliged to complete temporary visa and tax registration in accordance with Kyrgyz law.

According to article 72 of the Tax Code of the Kyrgyz Republic, non-resident persons are liable for income tax on income received from sources located in the Kyrgyz Republic. Moreover, in conformity with Article 109 of the Tax Code of the Kyrgyz Republic, the revenue of a non-­resident not affiliated with a business is subject to taxation at the source of disbursement without deductions at the following rates:
- dividends and interest - 10%;
- insurance payments, received under contracts for insurance or reinsurance of risks – 5%;
- telecommunications or transport services for international communication and shipping between the Kyrgyz Republic and other countries - 5%;
- income from royalties, services rendered (including management and consulting services), rent and other income - 30%.

If a physical person resident in the Kyrgyz Republic renders services upon the sale of software, he is liable for income tax at a rate from 10 percent to 20 percent depending on the amount received.

If a legal entity renders services upon the sale of software through a permanent office in the Kyrgyz Republic, then regardless of residency, the legal entity will be liable for all taxes levied in the Kyrgyz Republic (profit tax - 20 percent, value added tax - 20 percent, deductions for the emergency situations fund, road tax, and local taxes and fees). Accordingly, foreign persons are obliged to conduct bookkeeping and accounts in compliance with the legislation of the Kyrgyz Republic. According to Article 110 of the Tax Code, the revenue of a permanent office of a non-resident legal entity remaining after payment of profit tax and transferred out of the Kyrgyz Republic is not subject to additional taxation.

Are U.S. IT solution providers permitted to send personnel into the country to set up hardware/software-related systems?
There are no restrictions for U.S. information technology solution providers to send personnel to the Kyrgyz Republic for installation of hardware/software systems, except for visa restrictions on the term of the duration of their stay in the country.

Are special visa, work permits, and/or professional certification by an accredited body required?
There are no requirements for submitting professional certificates and providing work permits.
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Is the import of refurbished computer hardware, parts, and accessories (including toner cartridges) permitted?
The import of refurbished computers, parts, and accessories (including toner cartridges) is permitted.

If so, what are the documentation requirements?
The list of necessary documents is provided above in section B.

Is special labeling required?
In cases of importation of refurbished computers, parts, and accessories, the Revenue Committee does not require additional special labeling for identification of goods.

What value should be shown on the invoice?
The value of the imported product.

How are duties and taxes assessed?
New and used imported computers are treated the same for customs (duty and tax) purposes.
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Is the import of used computer hardware, parts, and accessories (including toner cartridges) permitted?
Policies are the same as for refurbished computer equipment. See answers above.
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Are duties and taxes assessed on the re-import of repaired computer equipment?
Computers that had previously been imported to the Kyrgyz Republic, but were subsequently taken out with the aim of repair, renovation, modernization, etc., are subject to taxation only on the components, details, costs, services and other expenses applied in the above-mentioned processes.

How should the commercial invoice appear?
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This response was prepared by the U.S. Department of State/Economic Section in Bishkek in July and Auguest 2003. For further clarification please contact:
Peter Eckstrom
Political/Economic Section Chief
U.S. Embassy Bishkek

Special Notes: The above information is intended to serve only as unofficial guidance. In seeking to obtain government rulings in specific cases, it will often be necessary to refer to special laws, separate regulations and announcements, and case-by-case decisions by the government. Beyond the general guidelines shown above, legal counsel should be retained at an early stage of consummation of a major procurement contract, and before entering into any legal commitments.

The information was provided by the Revenue Committee at the Government of Kyrgyz Republic's Ministry of Finance.

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