How to Start an IT Company in Kyrgyzstan from Scratch

In Kyrgyzstan, there is a rapid development of the IT industry, making it increasingly attractive to start a business in this field.

In this article, we will outline the steps needed to do this and what is required.

Founders of an IT Company

Founders of an IT company can be:

• Individuals (one or more)
• An individual and a company (or companies). Both foreign citizens and Kyrgyz citizens can establish a company.
• Only one company or several companies. The founders can be local or foreign companies.

Number of Founders

For certain forms of companies, the total number of founders is limited to no more than 30. This applies to limited liability companies and additional liability companies.

The number of shareholders (the founders of joint-stock companies) is not limited.

The minimum number of founders is one individual (or legal entity).

Legal Address Issues

The legal address of the company is the address specified in the documents required for state registration of the company. Thus, before submitting documents for registration, it is necessary to determine the legal address.

Legal Entity Questions

Before registering an IT company, it is necessary to choose the organizational and legal form, in simpler terms—select the type of legal entity.

In Kyrgyzstan, IT companies are often established as limited liability companies (LLC). In this case, the company can have one or more founders. Such a company cannot issue shares, and its charter capital is divided into shares.

Joint-stock companies are less common. These companies have their charter capital divided into shares and exist as either an open joint-stock company (OAO) or a closed joint-stock company (ZAO).

Additionally, in Kyrgyzstan, it is possible to open an individual entrepreneurship (IE). Individual entrepreneurs can also join the High Technology Park; there are no restrictions, and their taxation is the same as that of LLCs.

What Names are Suitable for an IT Company

Before registering a company, it is necessary to check the company name in the database of the Ministry of Justice in Kyrgyzstan. There is a restriction: it is not allowed to choose a name that is already assigned to another company in Kyrgyzstan. The name must be provided in two languages: Kyrgyz and Russian, and can also include English.

Points to Consider When Developing the Charter

The charter is the founding document of the IT company, approved by the founders. The requirements for the information that must be included in the charter are established by law.

When developing the charter, it is advisable to pay attention to the following points:

1. It is possible to define in the charter which transactions are considered large and therefore require a decision from the general meeting of participants (in an LLC). Transactions that are not considered large can be concluded by the director.

2. It is essential to specify the types of activities provided for in the law on the High Technology Park, which can be viewed here.

Norms for the Size of Charter Capital of the New Company

There is no minimum size for the charter capital of an LLC; it is determined in the charter by the founders. For joint-stock companies, the minimum charter capital is 100,000 som. For LLCs, in practice, it is from 1,000 som and above.

The charter capital must be registered in Kyrgyz som. The complete formation of the charter capital is not required immediately at the time of registration but within 12 months from the date of state registration of the company. The founders may decide otherwise and form the charter capital fully by the time of registration or before the 12 months are up.

Tax Benefits for IT Companies - Residents of the High Technology Park

Registered residents of the High Technology Park are exempt from paying the following taxes:

1. Corporate income tax;
2. Sales tax;
3. Value-added tax (VAT).

Additionally, for residents of the High Technology Park with employed workers:

1. A reduced personal income tax rate of 5%;
2. Reduced social insurance contributions—12% of the average monthly salary (fixed social security contributions of around $40 per month).

To stimulate the activities of "product" IT companies, additional benefits have been introduced, including exemption from VAT for foreign organizations providing marketing, advertising, consulting, and certain other services to High Technology Park residents.

Limitations for Joining the High Technology Park

It is not allowed to conduct activities that are not related to residency in the High Technology Park. 90% of their activities must correspond to the types of activities listed in the Law on the High Technology Park.

A contract must be concluded with the Directorate of the High Technology Park regarding the terms of activity, and a quarterly payment of 1% of revenue (income) must be made.

Tax benefits do not eliminate the need to submit tax declarations to tax authorities.

Do You Want to Launch Your IT Company in Kyrgyzstan but Still Have Doubts?

Sign up for a consultation and take the first step toward your dream!