Free economic zones (the FEZ) are the zones where foreign economic and business activities55 are subject to preferential legal treatment. Companies working in free economic zones enjoy the following benefits and preferences:
• Partial exemption from all taxes, dues, fees, and charges, for the entire period of activities within the free economic zone;
• Allocations in the amount of 0.1 to 2% from the annual proceeds from goods and services to the General Directorate of the free economic zone for the tax and other benefits enjoyed within its territory;
Simplified entry and exit procedure for foreign employees;
• Simplified and accelerated registration of a business entity;
• Simplified customs procedures; and
• Direct access to major infrastructure objects, including telecommunications, water supply, power supply, and transportation, in the course of activities within the territory of a free economic zone.
Companies registered in free economic zones are prohibited from:
• development and production of mineral resources;
• import, production and sale of excisable goods, except those meant for production purposes and production of goods other than excisable goods, after payment of taxes and customs duties in accordance with the laws of the Kyrgyz Republic;
• production, repair and sale of weapons and ammunition, production and sale of explosives used in production of weapons;
• production, processing, storage, deactivation, sale of radioactive, nuclear and other hazardous materials;
• import, storage, production and sale of narcotic and psychotropic substances, except precursors used in production purposes and imported in accordance with the laws of the Kyrgyz Republic.
Companies interested in operating in a free economic zone must be registered in it. Procedure for registration of business entities with foreign interest is established by the General Directorate of a free economic zone. Currently, there are 5 free economic zones functioning within the territory of the Kyrgyz Republic: the Bishkek FEZ, the Maimak FEZ, the Naryn FEZ, the Karakol FEZ and Leilek FEZ.