Kyrgyzstan's approval of tax agreement with Azerbaijan promises growth [COMMENTARY]

The recent approval by the Cabinet of Ministers of Kyrgyzstan to sign the "Agreement between the Republic of Azerbaijan and the Kyrgyz Republic on the elimination of double taxation and the prevention of tax evasion about income taxes" marks a significant step towards bolstering economic ties between the two nations. Signed on April 24, 2024, in Baku, and now awaiting ratification by the Jogorku Kenesh (Parliament) of Kyrgyzstan, the agreement is poised to attract foreign direct investment into Kyrgyzstan's economy.

Under the stewardship of the Ministry of Economy and Commerce, the agreement aims to eliminate double taxation for foreign companies, thereby creating an attractive environment for investment across various sectors of Kyrgyzstan's economy. By ensuring that income is taxed only once and fostering fair tax practices between the contracting states, the agreement also emphasizes the protection of residents from discriminatory taxation and aims to prevent tax evasion.

Moreover, the agreement facilitates the exchange of information between authorities in both countries, fostering transparency and compliance with international tax standards. This unified framework seeks to harmonize tax legislation relations between Kyrgyzstan and Azerbaijan, to increase trade turnover and encourage Azerbaijani investments in Kyrgyzstan. Currently, with significant investments already made by both countries in each other's economies, the agreement is poised to further deepen economic cooperation and mutual benefits between Azerbaijan and the Kyrgyz Republic.

Member of the economic policy, industry, and entrepreneurship committee of the Milli Majlis, Vuqar Bayramov said in this statement to Azernews that increasing trade turnover between Azerbaijan and Kyrgyzstan has become a top priority for both nations.

"In 2022, bilateral trade amounted to $10.18 million, a figure that surged to $65 million in 2023, highlighting a substantial increase. This growth can be attributed to rising exports from both Azerbaijan and Kyrgyzstan. Opportunities for further expanding trade are abundant, particularly with the anticipated benefits from the recently approved tax exemption agreement."

According to him, the agreement aims to eliminate double taxation barriers, facilitating increased mutual investments and bolstering trade between the two countries.

"This strategic move is expected to foster a conducive environment for economic cooperation and the creation of an investment fund between Azerbaijan and Kyrgyzstan will further enhance foreign economic relations."

"Ultimately, these measures are anticipated to stimulate investment inflows, encourage the expansion of export-import activities, and contribute to mutual economic growth for both nations," the MP concluded.