Kalikova & Associates
4.7 Free Economic Zones Free economic zones (FEZ) are the zones where foreign economic and business activities 35 are subject to preferential legal treatment. Companies working in free economic zones enjoy the following benefits and preferences: o
Partial exemption from all taxes, dues, fees, and charges, for the entire period of activities within the free economic zone;
o
Allocations in the amount of 0.1 to 2% from the annual proceeds from goods and services to the General Directorate of the free economic zone for the benefits enjoyed within its territory;
o
Complete exemption from customs duties on export of merchandise produced in the free economic zone, on import of merchandise into the free economic zone, and on merchandise for re-export;
o
For merchandise produced within the territory of a free economic zone with the purpose of further export - exemption from quotas (with the exception of export into the customs territory of the Kyrgyz Republic, where volume of export may not exceed 30% of the total annual volume of merchandise produced within the free economic zone) and exemption from licensing;
o
Simplified entry and exit procedure for foreign employees;
o
Simplified and accelerated registration of a business entity;
o
Simplified customs procedures; and
o
Direct access to major infrastructure objects, including telecommunications, water supply, power supply, and transportation, in the course of activities within the territory of a free economic zone.
Companies registered in free economic zones may not: o
Sell within territories of free economic zones of the Kyrgyz Republic petroleum, oil and lubricant materials, spirits and liqueurs, or tobacco products to individuals or legal entities other than the free economic zone subjects; and
o
Sell merchandise produced in a free economic zone in the domestic market of the Kyrgyz Republic in cases where value added within the territory of the free economic zone does not exceed 30% (15% for electronics and household appliances).
Companies interested in operating in a free economic zone must be registered in it. Procedure for registration of business entities with foreign interest is established by the General Directorate of a free economic zone.
35
The Law of the Kyrgyz Republic “On Free Economic Zones in the Kyrgyz Republic� as of 16 December 1992 (with the latest amendments as of 22 March 2007). 26