Kyrgyzstan offers moratorium on business inspections, tax service explains “slowness” in probing Kyrgyzneftegaz graft

The Cabinet of Ministers of Kyrgyzstan has proposed a moratorium on inspections of business entities that would apply until the end of this year.

The proposal, presented as a “shot in the arm” method of giving a lift to the business climate by easing pressure on enterprises, has been submitted for public discussion.

Both law enforcement and other authorised government agencies would be barred, with some exceptions, from conducting inspections for the applicable period if the moratorium is made law.

Exceptions would be made for:

• Inspections within the framework of criminal and civil proceedings;
• Inspections based on applications from entrepreneurs;
• Inspections made at the request of government agencies of other countries;
• Inspections based on requests from individuals and legal entities;
• Inspections in the presence of specific facts of violation of the law;
• Customs control;
• Tax audits;
• National Bank audits;
• Civil aviation inspections.

The proposed government generosity comes in the wake of Kyrgyzstan’s tax authority on March 16 levelling accusations of major corruption at ex-national security chief Kamchybek Tashiyev.

It alleged that ⁠Tashiyev and relatives defrauded state oil and gas ​company Kyrgyzneftegaz of around Kyrgyzstani som 4bn ($45mn).

In a shock move, the country’s president, Sadyr Japarov, a month ago fired Tashiyev, while he was in Germany for a medical appointment. Japarov and Tashiyev had ruled the Kyrgyz Republic in a power tandem for five years. Japarov has also mounted a still-ongoing purge of Tashiyev’s allies in parliament and across government. Tashiyev returned to Kyrgyzstan but, following advice from Japarov that he should “rest”, on February 17 he “temporarily” left the country for an unknown destination.

Azattyk on March 16 referred to reports that Tashiyev is preparing to make a major announcement after the Muslim holy month of Ramadan concludes on March 19.

The publication on March 19 pointed out that journalists as long as four years ago raised allegations of extensive corruption at Kyrgyzneftegaz, noting that one of those journalists, Bolot Temirov, was forced out of the country.

Challenged as to why only now the tax service was raising the same, or similar, allegations brought to attention by the journalists all those years ago, tax service head Almambet Shykmamatov responded to Azattyk: “"You, journalists, live in Kyrgyzstan and know the situation in the country better than I do. After all, you are investigating. Kyrgyzneftegaz was completely under the control of the State Committee for National Security [GKNB]. This is not news, is it?! You know very well that our tax officials have also fallen into the trap of the State Committee for National Security and are in prison until now.

“There is information that they [the accused] ‘hurt the business’, and when they were caught, the tax officials went to inspect them. In other words, the inspection processes of the tax authorities were under the control of the State Committee for National Security.

“Therefore, it was impossible to inspect Kyrgyzneftegaz at that time. Now the tax officials have been given the opportunity, we went to inspect and investigate. You journalists are only associating this with politics. There were two ways here: either reveal the fact or cover it up. Should we hide it so that people will turn it into politics, or should we reveal it even if it is too late? I think it should have been revealed. I think that now is the time, and we have revealed it."

The tax service reportedly gave an assurance that once the investigation into the allegedly illegal circumstances at Kyrgyzneftegaz enterprise is completed, “all hidden income and tax payments will be returned to the state.”