Amendments are made to the Tax Code that will affect every citizen of Kyrgyzstan. The Union of Banks reports.
Recall, the Ministry of Economy and Commerce submitted a draft law on amendments to certain legislative acts of the Kyrgyz Republic in the sphere of taxation to the Parliament for consideration. The business community, including the banking sector, was wary of the draft law.
«The main part of the recommendations presented by the banking sector was not taken into account. Although at all preliminary stages of the project consideration, during the discussions, the Ministry of Economy and the Tax Service promised that the proposals would be taken into account, and if they were not accepted, alternative solutions to the issues that arose would be presented. But the bill shows that not a single promise was kept,» the Union of Banks notes.
The country’s banking sector is concerned that the draft law proposes to abolish banking secrecy and provide the tax authorities with all information about transactions on taxpayers’ accounts online without a court decision.
«These points are of concern to all citizens, since one of the main principles of banks’ work is to protect the rights and interests of their customers. They entrust their money to commercial banks, relying on the fact that all transferred funds and information are under the protection guaranteed by the Constitution. The adoption of a norm in this format will undermine public confidence in the banking system, lead to an outflow of deposits, a decrease in the share of non-cash payments, economic growth rates and an increase in shadow turnover. Large-scale negative consequences are possible not only for the banking system, but also for the entire economy of the country,» the Union of Banks predicts.
Throughout the years of independence, information on transactions carried out on the accounts of the taxpayer, as well as on the current state of the account, was provided by banks to the tax authorities only on the basis of a judicial act. The Union of Banks believes that it was this implementation of the provisions of the Basic Law that ensured the population’s confidence in the banking system and led to a significant increase in non-cash payments and a gradual decrease in the shadow economy of the republic. Banking secrecy is the key to the development and stable, reliable functioning of the entire banking system, since the Constitution guarantees the secrecy of deposits of the population and the inviolability of property, that is, the inviolability of funds, movable and immovable property and information about bank deposits and accounts.
«Despite the current provision of the country’s Basic Law, the Ministry of Economy and Commerce is making its own changes to the Tax Code. In addition to this norm, the amendments did not take into account other proposals of banks. Despite repeated appeals, no decision has yet been made to resolve the issue of establishing a mechanism for VAT refunds on purchased works and services. The issues of deducting interest expenses on an accrual basis were not taken into account, although they had already been agreed between the parties earlier during the discussions of the working group,» the Union of Banks concluded.
