Taxation of dividends of individuals in Kyrgyzstan: new rules and the expected effect of the Cyprus double tax treaty (DTT)

19.06.2026

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Previously in our article, we examined the approach of the tax authorities to the taxation of personal income, including dividends received by residents, citizens of the Kyrgyz Republic, and foreign individuals. In practice, issues arose because the previous version of the Tax Code did not always clearly distinguish between categories of taxpayers and sources of income.

Under the earlier version of Part 7 of Article 191 of the Tax Code of the Kyrgyz Republic, personal income tax exemptions applied, in particular, to dividends received by a resident individual, except for dividends from participation in a foreign organization. Separately, dividends and other income of Kyrgyz citizens received abroad were regulated, taking into account the legislation of the foreign country, the existence of a double tax treaty, and the fact of foreign tax payment.

However, as Kyrgyzstan became a more attractive jurisdiction for new residents, citizens, and individuals structuring personal and investment income through Kyrgyzstan, the legislator introduced clarifying amendments. The new version of the Tax Code, effective as of 31 December 2025, provides a much clearer distinction between categories of taxpayers.

Currently, Part 7 of Article 191 explicitly states that the following types of taxpayer income from other activities are exempt from personal income tax:

Clause	Clause    2024 version	Clause      2025 version
4 / 4-1	4) dividend received by a resident individual, except dividends received from participation in a foreign organization;	4- -1) dividend received from participation in a domestic organization by an individual: a) a citizen of the Kyrgyz Republic, regardless of residency; b) a resident of the Kyrgyz Republic who is not a citizen, regardless of residence permit or “kayrylman” status;
10 / 10-1	10) dividend received by a citizen of the Kyrgyz Republic, as well as by a resident individual from participation in a foreign organization in accordance with the legislation of the country of incorporation, as well as income received by a Kyrgyz citizen in a foreign state in the absence of a double tax treaty between the Kyrgyz Republic and that foreign state, provided that tax was paid in that state;	10) dividend received by a citizen of the Kyrgyz Republic, as well as by a resident individual from participation in a foreign organization, as well as income received by |  10-1) dividend received from participation in a foreign organization by a resident individual of the Kyrgyz Republic who is not a citizen of the Kyrgyz Republic, regardless of residence permit or “kayrylman” status; |a Kyrgyz citizen in a foreign state;

Thus, the new wording is significantly clearer: the legislator separately defines citizens of the Kyrgyz Republic, residents of the Kyrgyz Republic, and foreign residents. This reduces the risk of differing interpretations and makes the tax regime for individuals more predictable.

An additional positive development is that on 8 June 2026 in Bishkek, Cyprus and Kyrgyzstan signed an Agreement for the Avoidance of Double Taxation with respect to taxes on income and capital, as well as the prevention of tax evasion.

The Cyprus agreement was particularly anticipated by market participants. In practice, individuals often have economic interests simultaneously in Kyrgyzstan and Cyprus through participation in foreign companies, dividend income, asset ownership, and investment or corporate structures. Therefore, a double tax treaty between these two jurisdictions is not only formal but also practically important for reducing tax uncertainty.

The official text of the agreement has not yet been published. However, it is likely that the document will follow a standard double taxation treaty model approach. This means that, once it enters into force, taxpayers should face fewer risks of conflicts arising from double taxation of the same income.

In conclusion, two key developments can be highlighted: Kyrgyzstan’s domestic tax legislation has become clearer regarding the exemption of dividends of individuals from personal income tax, and the signing of the double tax treaty with Cyprus is expected to further increase certainty for individuals receiving income through international structures.

Author: Yaroslavna Zakrevskaya