Bishkek, October 20.(Zpress) . In early October 2008 the Parliament of Kyrgyzstan adopted a new Tax Code, which has caused much controversy. Officials and businessmen have noted both positive and negative sides of the Code. Businessmen are concerned about the introduction of two new taxes – for sales and real estate.

It is no longer a secret that with the adoption of the new fiscal document the budget of the country loses over $ 160 million. Kyrgyz authorities plans to make up about half of that amount with the help of new taxes.

The Minister of Economic Development and Trade Akylbek Japarov supported the new version of the Tax Code but, nevertheless, got concerned about sales taxes. “If there is VAT, the sales tax should either disappear or become purely symbolic”, he said.

After a long dispute, the sales tax rate was slightly reduced: for banks - from 4 to 2%, for commercial enterprises - up to 1.5%. By 2011, the tax should be reduced to 0.5%. Nevertheless, businessmen believe that this innovation will have a severe impact on business.

The bankers also warned that the sales tax would trigger higher price for food and industrial products and increase interest rates. As noted by the executive director of Banks Union of Kyrgyzstan  Anwar Abdraev, “services of banks will be about 8-10 %  more expensive”.

As for the real estate tax, the rate will vary from 0.35 to 1% of the market value of housing and facilities, depending on the group in the property list. Combined with sales taxes, it could cause a social explosion, say entrepreneurs. The authorities, of course, exempted all the old houses, as well as pensioners and benefited recipients from the tax, but, eventually, everybody will have to pay - tax on production facilities, warehouses and other facilities, of course, will be included in the price of goods and services.