Kalikova & Associates participates in drafting legislation introducing stabilization of legal environment for investors

On October 23, 2014, Kyrgyz Parliament passed an act introducing amendments to the Investment Act, Tax Code, Non-tax Payments Act, and Social Security Tariffs Act. The proposed amendments define the meaning and scope of application of the stabilization regime.

Stabilization regime means that in the event of making changes or additions to the investment, tax, customs, or non-tax payments legislation within 10 years from the date of signing the stabilization agreement with the Government, the investor shall have the right to choose the most favorable legal regime for payment of taxes, including the value added tax, but excluding other indirect taxes, non-tax payments (except the fees charged for public services) and customs payments (except customs charges). The investor may exercise the right to claim stabilization of the legal regime in the following cases:

а) if it invests within 3 years from the date of signing the stabilization agreement in the charter capital of the investee enterprise by increasing the number of outstanding shares by the amount denominated in Kyrgyz soms and equivalent to not less than USD 5 million at the NBKR rate as of the date of signing the stabilization agreement and in the investee enterprise itself;

b) if it invests during its mineral exploration, prospecting, search, or mining operations, within 5 years from the date of signing the stabilization agreement, in the capital of the investee enterprise, including the charter capital of the investee enterprise, by increasing the number of outstanding shares or by increasing the charter capital by the amount denominated in Kyrgyz soms and equivalent to at least USD 20 million at the NBKR rate as of the date of signing the stabilization agreement and in the investee enterprise itself.

The above amendments were drafted with the active participation of Kalikova & Associates and Kyrgyz Ministry of Economy staff.