In June 2003 there was a work initiated to assist the republic of Kyrgyzstan in reformation of the tax system, decentralization of the budget system, deregulation and reformation of administration and in other questions of economic policy.

In May of 2003 in Moscow the negotiations between Head of the Secretariat for Foreign Investment of the Kyrgyz Rebublic Rafkat Hasanov and the Institute for the Economy in Transition were held , during which the interregional project on harmonization of tax legislation was discussed. These meetings became the starting point in development of bilateral relations.

On June 26-27, 2003 delegation of the IET led by Ye.T. Gaidar participated in III Investment Summit (Cholpon-Ata, Kyrgyzstan). During the summit a number of questions on deregulation, transparency and bona fide governance was raised; questions on direct investment and foreground courses of state operation were also considered. The discussion also addressed issues of granting preferences, which might be released in the form of simplified procedure of registration and licensing and reduction of governmental intervention as well as by way of tax rebate. During the visit a series of meetings with representatives of Ministry of Finance of KR, National Bank of KR and other interests was held. At the session of the summit Ye. T. Gaidar performed with the analyses of the situation in Russia and in republics of the former USSR.

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 On the initiative of the Secretariat for Foreign Investment Ye. T. Gaidar lectured on reformation of tax system and wider on issues of integration, exchange rates and prospects of economic development of Commonwealth countries in Government house. On October 27-30, 2003 the delegation of experts of the Institute for the Economy in Transition consisting of P.A.Kadochnikova , I.V. Trounin , E.C. Yanovsky and V.V. Onishchenko visited Bishkek. In Bishkek at the request of the Government of the Kyrgyz Republic IET held a seminar on "Economic reforms: experience of Russia for Kyrgyzstan", which was attended by leading IET experts and representatives of Kyrgyz government. Presentation of the reports presented at the seminar "History and main stages of the reform of the tax system in Russia (author: S. G. Sinelnikov-Murylev) "Reform of the indirect taxation in Russia (author: I.V. Trunin) "The Results of the reform of income tax and social contributions in Russia in the years 2000-2002 (author: P.A. Kadochnikov).

 On 28 April-1 may 2004, the head of the laboratory of the problems of fiscal federalism and sub-national finance in IET I.V. Trunin visited Bishkek (Kyrgyz Republic). The main task of the visit was to hold meetings with representatives of the Government of the Kyrgyz Republic and International monetary Fund, which were aimed at discussion of priority measures in the area of tax reform in Kyrgyzstan and issues of implementation of the commitments embodied in a joint Memorandum of the Government of the Kyrgyz Republic and the International Monetary Fund.

Within this process meetings were held with Vice-Prime-Minister of the RK D. Otorbayev, head of the Secretariat Vice-Prime-Minister of the RK R. Khasanov, head of the group of experts on the drafting of a new Tax code of Kazakhstan A. Krasnikov. A meeting was also held with the mission of the International monetary Fund in the Kyrgyz Republic headed by T. Saavalainen; in the meeting also participated the IMF official K. Ogato, and IMF permanent representative in Kyrgyzstan B. Muhapadyay.

The key provisions of the program for reforming the taxation of small business were discussed inter alia during the meetings. This issue is extremely important at the present time, as the radical reform of the taxation of small enterprises (refusal fr om the system of voluntary and obligatory patenting in the current form) is set by the International Monetary Fund as the main short-term task of the tax reform. Experts of the IET are generally sharing this approach. Draft chapters of the Tax Code of the Kyrgyz Republic "Unified tax on imputed income" and "Simplified tax system", which will be included in the draft of the new Tax code of the Kyrgyz Republic elaborated in the framework of cooperation with the IMF were developed on the basis of the results of the meetings held. In addition, the medium-term program of reforming the tax legislation, and the promotion of the reform within the framework of the USAID - Bearing Point «Fiscal reform in the Kyrgyz Republic» was discussed . Currently, the preparation of a new version of the Tax Code of the Kyrgyz Republic is carried out in the framework of this medium-term program, which initially will be complemented by several heads missing in the current Tax code (first of all, this concerns the chapters governing the taxation of small businesses).

Meeting with representatives of the project «Fiscal reform in the Kyrgyz Republic» was held on the results of the trip. The main directions of the program and participation of experts of the IET in this project were agreed with them. At present the conclusion of the contract with the USAID is produced.

On 16 July 2004 the IET delegation headed by Е.Т. Gaidar in part I.V. Trounin and P. A. Kadochnikov took part in the IV Investment summit in Cholpon-Ata (Kyrgyz Republic), the purpose of which was development of short annual program of investment policy. Е.Т. Gaidar delivered a report entitled "Strategy of tax reform in the Kyrgyz Republic".

The main task of the visit of the delegation of the IET in the Kyrgyz Republic in the period from 14 to 17 July 2004 was to participate in the annual investment summit under the chairmanship of the President of the KR A. Akaev. Representatives of largest foreign companies and business community of the Kyrgyz Republic as well as economists were also invited to the forum.
Problems of tax reform in the Republic, the adoption of the new tax code, content and stages of the reform, directions of reforming of some taxes were discussed during the summit. Ye.Т. Gaidar delivered a report dedicated to tax policy and tax administration.

The report of the Director of the IET Ye.Т. Gaidar was devoted to tax policy and tax administration. As it was noted, those taxes decrease in the marginal rates of which may not lead to a significant reduction in the revenue part of the budget should be considered in the first place in tax reform. Such taxes exist, as experience shows, and they operate mostly in the CIS and of course in Kyrgyzstan. Yegor Gaidar refers to such taxes income tax. Russia established a regressive views income tax precisely because taxes on a progressive scale was not paid. According to the Director of the Institute, the common problem of Russia and Kyrgyzstan is that there are very inefficient taxes impeding the attraction of investments, however they produce large revenues for the government. Solution to this problem must be looked for very carefully. In addition, according to Ye.Т. Gaidar, there is a very intricate system of resource taxes. In Russia it was replaced with a simple and understandable system in the framework of tax reform and as the result the increase in revenues was received. In the end it was noted that the tax reform is necessary to Kyrgyzstan and in this case it all depends on the effective steps of the leadership of the country, which should lead to significant economic growth. In addition, during the trip a number of working meetings on tax reform with the following representatives of the Executive power of the Kyrgyz Republic was conducted : Vice-Prime-Minister of the Kyrgyz Republic D.K. Otorbaev ; counselor of the Vice-Prime-Minister of the Kyrgyz Republic R.F. Khasanov ; Deputy Minister of Finance of the KR M.A. Ismailov. In the period from 3 to 7 October 2004 the staff of the Institute for the Economy in Transition visited the Kyrgyz Republic at the invitation of Vice-Premier D. Otorbaev.

At the invitation of the UNDP and the CASE-Kyrgyzstan IET experts S. Sinelnikov-Murylev, I. Trunin, P. Kadochnikov, K. Yanovsky in the delegation of the Academy of National Economy under the Government of the Russian Federation visited the Kyrgyz Republic, Bishkek, in the period from July 12 to 15 July 2005.

Participation in the preparation of the Program of economic reforms in the Kyrgyz Republic on the draft of the Development Program collaborated by the United Nations was the main purpose of the trip . During the visit, meetings were held with the following officials: D.K. Otorbaev, «Investment roundtable»; R.F Hasanov, Executive Director, «Investment roundtable»; M. Dambrovsky, Chairman of the Board, CASE; R. Mogilevsky, Executive Director, CASE-Kyrgyzstan; J. Skuratowicz, UNDP resident representative in the Kyrgyz Republic; A. Mukanbetov, program coordinator, UNDP in the Kyrgyz Republic. In addition, members of the delegation participated in a seminar with representatives of donor organizations in the Kyrgyz Republic, wh ere discussed the Program of economic reforms as well as in seminars and meetings with representatives of the government, business and expert community to discuss the individual sections of the Program.

In the period from 17 to 20 October 2005 a delegation from the Institute for the Economy in Transition visited Bishkek. The aim of the visit was to participate in the conference dedicated to presentation of the Program of development of the Kyrgyz Republic «Kyrgyzstan at a New Stage of Development» and also to the discussion of the program and current issues of reforms in the Republic. In the framework of discussions, meetings were held with the following officials: 1. E. Skuratowicz the Head of the UNDP office in the Kyrgyz Republic; 2. A. Mukanbetov project Coordinator of the UNDP office in the Kyrgyz Republic; 3. I. Kemple Executive Director of the Chamber of tax consultants; 4. T. Kim member of the Board of the Chamber of tax consultants; 5. E. Umetaliev President of «Kyrgyz Concept»; 6. M. Smanalieva the President of the company «Partner»; 7. R. Khasanov undersecretary of Finance of the Kyrgyz Republic; 8. K. Kanimetov head of Economic Policy Department of the President Administration of the Kyrgyz Republic. The meetings were dedicated to the reforms in the Kyrgyz Republic. Discussed issues included:
• stability of macroeconomic policy;
• tax reform and increase of incomes of the budget system;
• reforming the system of tax administration;
• optimization of public expenditures;
• reducing the budget deficit and foreign debt management. "Publication "Kyrgyzstan at a New Stage of Development".