Tests of doing business and penalties for unregistered entities considered as doing business in Kyrgyzstan

1) What is considered doing business without registration?

Doing business without registration refers to the conduct of independent and self-initiated economic activity by individuals or legal entities, carried out in their own name and at their own expense or with borrowed funds, at their own risk and under their property liability, for the purpose of generating profit, without the required registration with the tax authority or the Ministry of Justice.

2) What are the key indicators of doing business?

Under the legislation of the Kyrgyz Republic, an activity is recognized as entrepreneurial if it is carried out:

• independently;
• at one’s own risk;
• on a systematic basis;
• with the purpose of generating profit;
• by individuals or legal entities registered in accordance with the procedure
• established by law.

3) What are the legal consequences of doing business without registration?

The legislation of the Kyrgyz Republic provides for administrative and criminal liability on the following grounds: 

• tax evasion;
• conducting economic activity without registration with the tax authorities;
• engaging in unlawful entrepreneurial activity.

4) What is the penalty amount in 2025?

Under administrative liability, the amount of fines is as follows:

• Tax evasion, namely the failure to submit or the late submission of documents related to the calculation and payment of taxes to the budget, entails a fine of 3,000 KGS (≈USD 34.3) for individuals and 13,000 KGS (≈USD 148.6) for legal entities;
• Conducting economic activity without registration with the tax authorities entails a fine of 1,000 KGS (≈USD 11.4) for individuals and 5,000 KGS (≈USD 57.2) for legal entities.

5) Is criminal liability possible?

Yes, the Criminal Code of the Kyrgyz Republic provides for criminal liability for engaging in entrepreneurial activities without registration, if the act is associated with the receipt of income on a large scale. The punishment is community service for 40 to 100 hours or a fine of 20,000 KGS (≈USD 228.7) to 30,000 KGS (≈USD 343).

The same act, if associated with the receipt of income on an especially large scale, is punishable by community service for 100 to 300 hours, or by disqualification from holding certain positions or engaging in certain activities for up to two years, or by corrective labor for a term of one to two years, or by a fine of 50,000 KGS (≈USD 571.7) to 100,000 KGS (≈USD 1,143.5).

6) Who identifies unregistered business activity?

Administrative cases concerning offences related to the failure to comply with registration requirements are considered by the competent authority of the State Tax Service.

Criminal cases concerning offences against the order of economic activity fall within the jurisdiction of the internal affairs authorities.

7) What should be done if the activity is already ongoing without registration?

The only possible solution is to legalize the status of the business through state registration with the tax authority for the purpose of carrying out individual entrepreneurial or labor activity, or by registering a legal entity with the Ministry of Justice.

Conducting the activities of a legal entity without state registration is practically meaningless, as the legal capacity of a legal entity arises from the moment of its state registration. Accordingly, transactions concluded by an unregistered legal entity shall be deemed null and void and shall not entail any legal consequences.

In the case of engaging in entrepreneurial activity without forming a legal entity, such a right arises for an individual from the moment of registration as an individual entrepreneur or the acquisition of a patent (patent-based tax regime). However, engaging in entrepreneurial activity without registering as an individual entrepreneur or obtaining a patent is more common, as it allows one to avoid paying taxes and completing the formalities related to the preparation and submission of required documents. Nevertheless, such activity is unlawful and entails administrative or criminal liability, depending on the amount of profit obtained.

8) What obligations arise after registering a business?

After registering a business, an individual, individual entrepreneur, or legal entity, along with acquiring rights, also assumes corresponding obligations, including:

• Tax obligations: submission of reports, payment of social contributions and taxes in accordance with the applicable tax regime;
• Accounting obligations: different standards and rules apply to large, medium, and small business entities;
• Labor obligations: compliance with labor legislation, ensuring occupational health and safety;
• Corporate obligations: conducting activities in accordance with the founding documents, complying with corporate governance procedures, and notifying the registering authority of any changes;
• Compliance with applicable legislation: adherence to licensing and permitting requirements, applicable technical regulations and standards, and other legal requirements.

9) From what income level must an individual register as an entrepreneur?

The legislation of the Kyrgyz Republic does not establish a threshold income amount that would trigger the obligation to register as an individual entrepreneur. The right to engage in entrepreneurial activity is granted to individuals only after registering as an individual entrepreneur with the tax authority or acquiring a patent. Accordingly, engaging independently in any activity that systematically generates income requires registration as an individual entrepreneur or the acquisition of a patent, in cases where the patent-based tax regime is applicable to the type of activity in question.

Authors: Aisanat Safarbek kyzy, Bermet Mukaeva