Kyrgyzstan is preparing for amnesty of capital

Kyrgyzstan is going to close its eyes on revenues obtained from undisclosed sources.

Kyrgyzstan is preparing for capital amnesty, the fourth such amnesty in the country’s history. Kyrgyz parliament has already approved a law on voluntary legalization and amnesty of assets of individuals. Once the law is signed by President Sadyr Japarov, many of those who have reasons to hide their capital will be able to regularize all assets they obtained before January 1, 2022.

Well-meaning intentions

According to lawmakers who initiated the law, the key goal of the document is to attract more investments in the Kyrgyzstani economy and decrease the shadow economy. The country’s authorities hope that the amnesty on capital will help them to return assets illegally withdrawn from the country. In order to reach this goal, they are ready to guarantee anyone who will voluntarily regularize their capital that the government will not investigate how they obtained their assets.

However, the new law isn’t going to be applied to those who are under criminal investigation or included on sanctioned lists. Individuals who obtained their capital through the illicit trafficking of humans, arms and drugs, as well as those who were engaged in terrorist or extremist activities won’t be forgiven either.

Moreover, individuals regularizing property and assets worth less than $1.1 million will not be required to pay a fee. On the other hand, those whose assets are worth more than that will be obliged to pay $11,406.

The value of an asset should be determined by applicants on their own. The government said it isn’t going to check this information. This means that many will be able to declare revenues they don’t really possess. As a result, they can avoid income tax and any inconvenient questions about their capital.

The government guarantees that it will not investigate any cases related to illegal enrichment. All previous capital amnesties didn’t include such guarantees, which is why none of them succeeded.

According to the Ministry of Economy of Kyrgyzstan, the upcoming voluntary legalization and amnesty of assets is a preliminary stage to the universal asset declaration as the country’s Tax Code requires.

«We need this new law partly because the vast majority of people do not meet their tax obligations. In this situation the transit to the universal tax declaration when tax authorities can compare revenues and expenses is going to be a vivid proof that the country reached maturity in the sphere of taxation,» the ministry said in a statement.

Setting to zero

«There are some problems related to this law as some people may think that they can legalize any illegal assets at any time,» Iskander Sharshanaliyev, a Kyrgyz economist said.

The expert agrees that the country should do everything needed to make the shadow economy smaller, but it should do so carefully. «The law is setting any financial crimes committed before the voluntary declaration to the absolute zero. Those who obtained them illegally will be granted a waiver from any legal prosecution. I can understand why lawmakers did this. They want people who control illegally obtained capital to put this money into the national economy again. However, as this practice has proven many times, immunity from prosecution isn’t good for social relations in the country. People have to know that the punishment is inevitable if someone breaks the law,» he said.

Dastan Bekeshev, a member of Jogorku Kenesh, the parliament in Kyrgyzstan, said that despite some doubts about the law he supports the legislation.

«At first glance, it seemed to me inappropriate but now we have rules that make it impossible to avoid punishments for specific crimes,» the MP noted.

However, Bekeshev admitted that corrupted businessmen and officials are also going to be forgiven, which is a pity. Earlier he said that these corrupted individuals will probably be happy with the new law and would celebrate it with champagne.

«It is a pity that the law has weaknesses and many will be able to “declare air.» For instance, when neighboring Kazakhstan adopted a similar law, it required an applicant to have money in a banking account before showing it in an income declaration,” Bekeshev said.