International Business Council
This partnership aims to promote legislative reforms to provide incentives for green business practices that improve the environmental and social impact of business in Central Asia.
The Partner
IBC is one of the largest business associations in Kyrgyzstan, uniting more than 120 large companies, whose collective contributions account for more than 30% of tax revenues to the budget of the Kyrgyz Republic. For over two decades, IBC has made a significant contribution to creating an attractive investment climate and stimulating economic development in Kyrgyzstan. As the IBC acts as a link between the business community, government agencies, international organizations and diplomatic missions in Kyrgyzstan, it a key facilitator of multi-stakeholder dialogue and cooperation.
Currently, a priority of IBC is to promote green practices to reduce the negative impact of business on the environment. These impacts often cause tensions between business and local communities and addressing them requires legislative changes and improvements in knowledge and practice.
Our support
With our support, IBC partnered with the Association of Environmental Organizations of Kazakhstan and the Center for Progressive Reforms in Uzbekistan. Together they mapped conflicts over environmental impacts between businesses and local communities, analyzed existing incentives and enforcement measures, and identified success stories in resolving environmental disputes. Based on the results of the analysis, recommendations were developed to encourage businesses to adopt green practices. These recommendations were developed and validated in an inclusive process that took into account the interests of multiple local communities, civil society organisations, businesses and government agencies.
The Results
The inclusive research process delivered key insights relating to the social tensions and environmental costs of some current practices and generated business and government support to address these and increasing incentives for the green transition. In Kyrgyzstan, results included:
- Changes in the Tax Code: amendments have been made to the VAT article. Now, when importing energy-efficient technologies, including renewable energy sources and hydropower plants (HPPs), a list of goods eligible for VAT exemption (around 12%) has been established.
- Exemption from Customs Duties: as part of the policy to promote sustainable solutions, a list of goods used in “green” sectors of the economy has been developed, for which customs duty exemptions ranging from 5% to 15% are provided.
- Changes in Investment Legislation: amendments have been made to investment legislation and regulations to stimulate domestic production. A decree titled “On Providing Preferential Taxation for Priority Sectors” has been adopted, which offers exemptions from three types of taxes for five years (corporate tax, VAT, and social security contributions) for enterprises in priority sectors such as energy, agriculture, tourism, textiles, and others.
- Participation in the Climate Fund: a climate fund has been established under the Ministry of Ecology, which coordinates efforts between donors and businesses on green innovations and technologies. MDS is a participant in this platform and will further promote the developed recommendations.
In Kazakhstan and Uzbekistan, the process resulted in ministerial agreements to create working platforms to discuss the recommendations reflected in country reports of the regional group on promoting green incentives.These platforms are currently working on incorporating recommendations on green incentives into legislation of respective countries