Kyrgyz President Sadyr Japarov warned in an interview that the government might take control of markets if protests continue, a day after delaying new regulations by six months. Vendors in Kyrgyzstan have been protesting since late November against upcoming rules that would require cash registers and sales reports for tax purposes.
Anyone who has visited a Kyrgyz market knows that prices are set through bargaining and there are no receipts.
On November 11, the Kyrgyz State Tax Service released a list of 12 types of businesses and a reminder that the current flat fee system would end on January 1, 2024. This led to protests in all major cities, where markets play a vital role in trade and daily life.
On December 5, Japarov visited Bishkek’s largest market, Dordoi, where about 1,000 people had gathered. After speaking with vendors, he announced the postponement of the new regulations until July due to the tax service’s “unpreparedness.” He argued in favor of the tax reforms, emphasizing the need for the state to generate revenue through taxes and customs. He also mentioned that small businesses would not face taxes, but it was important to track income and sales.
According to Chairman of the Cabinet of Ministers Akylbek Japarov (no relation to the president), Kyrgyzstan is the only Central Asian country not using electronic invoices. Efforts to implement the Electronic Invoice Note system (ETTN) have faced obstacles.
In November 2022, the Kyrgyz State Tax Service announced that on January 1, 2023, sellers would need to issue e-invoices. In May, new requirements were introduced for all taxpayers to use e-invoices, with exceptions for those using cash registers with annual revenue below 8 million Kyrgyz soms.
The push for fiscalization clashes with public distrust of the government and concerns about corruption. While there is a need to modernize the tax system, lack of trust and fear of not seeing any benefits from the government remain. Japarov suggested that hesitance to adopt modern accounting methods might be due to people needing to legalize previously hidden properties and money. He also promised to lead by example in this regard.
During remarks at Dordoi, Japarov alleged that unnamed forces were using merchants as instruments for another revolution. Vendors denied this accusation.
In response to a question about punishing those encouraging protests, Japarov threatened to introduce external management to the markets if rallies continued, similar to what was done with the Kumtor gold mine in 2021.
This situation reflects similar issues such as the Kempir-Abad matter, where the failure to explain policies and their impact led to public protests and government repression. This might also be on the minds of those opposing fiscalization.