No taxes imposed upon incomes on deposits  

On January 22, 2014, after long-lasting discussions the Government of the Kyrgyz Republic took a decision about cancellation of the initiative announced by the Ministry of Finance on introduction of income tax imposed on accrued interests of individuals’ bank deposits. This fact has become known in the course of the working meeting held in the Government House of the Kyrgyz Republic.  

The first Vice Prime Minister, Dzhoomart Otorbaev, Ministers of Finance and Economy, Olga Lavrova and Temir Sariev, heads of the National Bank of the Kyrgyz Republic and the Tax Service, Zina Asankojoeva and Ishak Masaliev, the President of the Union of Banks, Anvar Abdraev and other people participated in discussion headed by the Prime Minister Zhantoro Satybaldiev.  

REFERENCE  

As of December 31, 2013, deposits of individuals amounted to KGS 28.4 billion or 42.1% of the total deposits in the banking system. According to the preliminary data, average weighted interest rates on received deposits (flows) as of December 31, 2013, constituted 6.7%.  

Background:  

The draft law, which envisages that accrued interests on deposits in the banks shall be excluded from the list of non-taxable incomes since January 1, 2014, was initiated by the Ministry of Finance of the Kyrgyz Republic in order to supplement revenue part of the budget.  

Analysts of the financial market emphasized decrease in growth rates of depositary base among possible adverse results of introducing taxes imposed upon accrued interests on individuals’ deposits, which could have negative effect on funding of the real sector of economy. Moreover, financial experts forecasted increase of interest rates on credits and decrease of security level necessary for economic development, growth of domestic savings of the population deposited in the banks and, respectively, redistributed for lending purposes. Experts considered decrease of non-cash currency circulation, due to the fact that the population would try to find alternative ways for investment of their savings due to reduction of incomes received from their depositing in the commercial banks, as one more result of this draft law adoption.  

ь On condition of currency in circulation in the Kyrgyz Republic for the IY quarter of 2013.  

Total amount of currency in circulation as of January 1, 2014 constituted KGS 66 954.1 million, thereof KGS 4 781.5 million were in the cash desks of the commercial banks, the other currency is outside the banking system (total amount of currency in circulation increased by KGS 8 702.0 million or by 14.9 percent compared to the corresponding period of the last year).  

In the IY quarter of 2013, the total amount received in the cash desks of the commercial banks in the republic constituted KGS 239 504.1 million, having increased by KGS 55 074.3 million or by 29.9 percent compared to the IY quarter of 2012.  

The amount issued from the cash desks of the commercial banks in the IY quarter of 2013 amounted to KGS 244 233.6 million, having increased by KGS 52 881.5 million or by 27.6 percent compared to the IY quarter of 2012.  

In the IY quarter of 2013, recovery of currency to the cash desks of the commercial banks constituted 98.1 percent (increase constituted 1.7 percentage points compared to the IY quarter of 2012). 

Dynamics of currency recovery in the cash desks of the commercial banks for the IY quarter of 2013 is given in Table 1 by regions.  

in percent 

in percent 

Licenses/certificates have been issued to the following non-bank financial institutions and exchange offices: 

Certificate of accounting registration of LLC MCC "Central Asia" № 479 dated January 22, 2014 for micro-crediting of individuals and legal entities. Legal address: office 605, 19, Razzakov str., Bishkek.  

Certificates/licenses of the following non-bank financial institutions have been cancelled /revoked: 

Certificate of accounting registration of LLC MCC "К2-credit" № 408 dated November 02, 2011 for micro-crediting of individuals and legal entities has been cancelled since January 20, 2014. Self-liquidation according to minutes №1 dated January 16, 2014. Legal address: 166, Abdrakhmanov str., Bishkek.  

Certificate of accounting registration of LLC MCC "Mundus-Credit" № 202 dated March 28, 2009 for micro-crediting of individuals and legal entities has been cancelled since January 22, 2014. Self-liquidation according to the decision of the sole participant dated January 20, 2014. Legal address: 33/1-19, Razzakov str., Bishkek.  

Certificate of accounting registration of LLC MCC "Bai Kazyna" № 437 dated March 02, 2012 for micro-crediting of individuals and legal entities has been cancelled since January 22, 2014. Self-liquidation according to the decision of the founder №3 dated January 22, 2014. Legal address: "New market", w/n, Amanbaev str., Balykchy town, Issyk-Kul region.  

License of CU "Bailykka kadam" № 351 dated March 19, 2002 has been cancelled since January 21, 2014 according to the minutes of the general meeting of CU "Bailykka kadam" dated January 17, 2014, and the statement of the CU Chairman of the Board dated January 17, 2014. Legal address: 32/10, T. Koshuev, Uzgenkiy district, Uzgen town, Osh region.  

License of the Financial Cooperative of CU "Capital-Osh" № 90 dated February 15, 1999 has been cancelled since January 23, 2014, according to the minutes of the general meeting of FC "CU Capital-Osh" dated January 19, 2014 and the statement of the FC Chairman of the Board dated January 22, 2014. Legal address: 224, Kurmanjan-Datka str., Osh city, Osh region.  

License of CU "Koshumcha" № 195 dated July 13, 2000 has been revoked since January 16, 2014. The decision to revoke the license of Credit Union "Koshumcha" № 195 dated March 10, 2005 was taken according to the Decree of the NBKR Supervisory Committee №01/3 dated January 16, 2014. Legal address: 131, S. Orozbakov str., Kochkor village, Kochkorskiy district, Naryn region.  

Interbank payments