Audit reveals financial irregularities in Tax Service; STS disagrees with findings

Kyrgyzstan's State Tax Service (STS) has publicly disagreed with key findings from an audit conducted by the Accounts Chamber, asserting that the audit's conclusions are not substantiated by actual tax control data and do not reflect an objective assessment of the STS's operations.

The Accounts Chamber's audit report highlighted risks of potential budget revenue shortfalls amounting to 11.5 billion soms (approximately $130 million USD). These risks were reportedly derived from an analysis of tax declarations, financial statements, and electronic invoices submitted by taxpayers. However, the STS contends that such analytical data alone does not constitute proof of violations of tax legislation or financial misconduct by the tax authority itself.

Furthermore, the STS disputes the audit's conclusion that tax benefits for the company "Eti Bakyr Tereksay" should have ended on December 31, 2023. The service explained that these benefits are granted under an investment agreement with the Cabinet of Ministers, and the duration of these benefits is currently under review and clarification at the presidential administration level. Consequently, the STS deems the audit's recommendations for tax accrual for 2024-2026 as premature and unfounded.

The audit also pointed to alleged violations of internal financial discipline and irregularities in construction and repair work. The STS clarified that its central administrative building is designated as a strategic object, with a state enterprise acting as the general contractor for design and construction. The final cost will be determined after a state expertise review, and current funding stages do not represent violations. While acknowledging overstatements in work volumes by contractors on some regional projects totaling 152,000 soms (approximately $1,700 USD), the STS noted that contractors have confirmed their commitment to return the funds. The service also stated that repairs and equipment for the Talas regional tax office, valued at 8.3 million soms (approximately $95,000 USD), were funded by gratuitous aid, and other repairs totaling 5.4 million soms (approximately $61,000 USD) are being accounted for as documents are received.

Regarding allegations of overpaid salaries totaling 6.8 million soms (approximately $70,000 USD), the STS also expressed disagreement with the Accounts Chamber's findings, indicating that this figure is also contested.