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Tougher Laws on Tax Evasion

By News Briefing Central Asia
As well as introducing stricter punishments for tax evasion in Kyrgyzstan, the government should reform the tax office if it is to increase state revenue, say NBCentralAsia observers.

The state news agency Kabar reported on February 14 that the committee for collecting taxes and duties has proposed to make business executives who systematically avoid paying taxes criminally liable for their actions.

Officials also want to be given the right to repossess property without a court order if tax evaders admit they are in debt.

According to the tax office, the total amount of unpaid taxes in Kyrgyzstan exceeded three billion soms, around 80 million US dollars, at the beginning of this year.

Kyrgyzstan’s spending budget approved by parliament on February 20 is 26 billion soms, some 670 million dollars.

Avazbek Momunkulov, member of parliament and head of the parliamentary financial committee, says that introducing stricter punishments may help resolve the problem, but “systematic evasion” needed to be properly defined.

Finance Minister Akylbek Japarov wants the law to go further and believes that “those, who don’t pay taxes on time, should be deprived of the right to do business”.

As well as introducing relevant changes to the criminal code, the taxation authorities should introduce new techniques for collecting taxes, says Japarov.

“Modernising the technology in the country’s tax system will significantly reduce the cases of abuse within it,” he said.

But stamping out corruption will not be easy and collusion between businessmen and tax officials is common.

Sapar Orozbakov, director of the Bishkek-based Centre for Economic Analysis, said, “It is no secret that tax officials take bribes, let businessmen avoid paying some taxes and allow them to delay payment.”

Avazbek Momunkulov, who is also a former head of the tax committee, does not deny that corruption occurs in the tax service.

“Until the state provides tax officials with a decent salary, it is impossible to make them work conscientiously,” he said.

The level of corruption is fuelled by the fact that many businesses routinely fiddle their books and refuse to disclose how they operate, says Edil Israilov, head of the department responsible for tax debt affiliated to the state committee for the collection of taxes and duties.

(News Briefing Central Asia draws comment and analysis from a broad range of political observers across the region.)