Kyrgyzstan dreams of becoming global creative industries hub

Kyrgyzstan’s president has given final approval to the creation of a park for creative industries that the government hopes will attract professionals working in IT, cinema, music and design through tax breaks.

Eurasianet reports that the incentives approved by Sadyr Japarov will cover 20 different types of activities and will extend to foreign companies and businesspeople as well as those from Kyrgyzstan. The primary criterion is that entities based at what will be known as the Creative Industries Park should show that 90 percent of their operations are based around creative activities.

The backers of the law are enthusiastic about the new law’s potential for transforming Kyrgyzstan into a regional leader for the arts as well as generate revenue for the budget. The exact nature of the incentives have yet to be devised, but experts watching these developments believe they have a good idea of what is awaiting.

Nazgul Kubakayeva, the director of the Creative Industries Association, a Bishkek-based lobby group, has said that residents of the new park will be exempt from sales tax and taxes on profit. Employees of resident entities will pay a reduced rate of income tax – so 5 percent instead of 10 percent – and the size of required social security contributions will also be lower, Kubakayeva said in a July interview with the Central Asian Bureau for Analytical Reporting.

The tax question is a central component of this initiative.

Entrepreneur Daniyar Amanaliyev, a vocal champion of the creative economy sector, explained in a YouTube talk earlier this year that as the authorities seek increasingly to diversify their tax base away from only large enterprises, they are looking at small- and medium-sized businesses that have for years flown under the radar. This shift in policy will affect people in the creative sector too, he said.

“Better to agree now on a special tax regime. The Creative Industries Park [will be] created and many talented people will not have to flee Kyrgyzstan once they realize that they will be forced to pay a lot,” he argued.

This is not Kyrgyzstan’s first run at something of this kind. A High-Tech Park, whose companies mainly work on providing IT services to foreign firms, has been up and running since 2011 and currently counts around 100 resident entities.

The volume of money generated there is relatively modest, though. Total revenue at the park in 2021 amounted to about 2.1 billion som ($25 million), an amount that later translated into 62 million som in tax payments.