ORDER OF THE GOVERNMENT OF THE KYRGYZ REPUBLIC

of January 17, 2017 No. 25

About measures for execution of articles 10 and 14 of the Agreement between the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Republic of Tajikistan and the Government of the Republic of Uzbekistan about parallel work of power systems of the states of Central Asia signed on June 17, 1999 in the city of Bishkek

In order to avoid contradictory practice of application of articles 10 and 14 of the Agreement between the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Republic of Tajikistan and the Government of the Republic of Uzbekistan about parallel work of power systems of the states of Central Asia signed on June 17, 1999 in the city of Bishkek according to part 2 of article 32 of the Law of the Kyrgyz Republic "About international treaties of the Kyrgyz Republic" the Government of the Kyrgyz Republic decides:

1. Approve explanation of procedure for execution of articles 10 and 14 of the Agreement between the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Republic of Tajikistan and the Government of the Republic of Uzbekistan about parallel work of power systems of the states of Central Asia signed on June 17, 1999 in the city of Bishkek (further - explanation), according to appendix to this resolution.

2. To the State Tax Service under the Government of the Kyrgyz Republic to be guided by explanation for the purpose of ensuring control of observance of the tax legislation by "National Power Grid of Kyrgyzstan" open joint stock company.

3. To impose control of execution of this resolution on department of finance and credit policy and department of the industry, fuel and energy complex and subsurface use of Government office of the Kyrgyz Republic.

4. This resolution becomes effective after seven days from the date of official publication.

Appendix

Explanation of procedure for execution of articles 10 and 14 of the Agreement between the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Republic of Tajikistan and the Government of the Republic of Uzbekistan about parallel work of power systems of the states of Central Asia signed on June 17, 1999 in the city of Bishkek

Article 14 of the Agreement between the Government of the Republic of Kazakhstan, the Government of the Kyrgyz Republic, the Government of the Republic of Tajikistan and the Government of the Republic of Uzbekistan about parallel work of power systems of the states of Central Asia signed on June 17, 1999 in the city of Bishkek (further - the Agreement), provide entry into force of the Agreement from the moment of its signing, and also is determined that the Agreement is signed for a period of five years and will be prolonged automatically for the subsequent five-year periods if the Parties do not make other decision.

At the time of agreement signature the Law of the Kyrgyz Republic "About the conclusion, ratification, execution and denouncement of international treaties of the Kyrgyz Republic" of May 27, 1994 was effective with No. 1548-XII which preamble provided that the Kyrgyz Republic signs and performs the international agreements with foreign states and the international organizations according to the Constitution of the Kyrgyz Republic on the basis of the conventional principles and rules of international law regulating procedure for the conclusion and accomplishment of international treaties.

The principles and rules of international law are the regulations stated in Articles of organization of the United Nations of June 26, 1945, the Declaration on the principles of international law concerning friendship and cooperation between the states according to Articles of organization of the United Nations (It is accepted by the resolution 2625 (XXV) of the United Nations General Assembly of October 24, 1970), the Charter of the Commonwealth of Independent States of January 22, 1993, become effective for the Kyrgyz Republic since December 18, 1993 based on the resolution of Jogorku Kenesh of the Kyrgyz Republic of December 18, 1993 No. 1346-XII, the Vienna convention on the right of international treaties of May 23, 1969 which the Kyrgyz Republic joined according to the Law of the Kyrgyz Republic of July 5, 1997 No. 49.

It should be noted that the Agreement is the international treaty, one of the parties of which is the Kyrgyz Republic as answers the determination of the term "Agreement" fixed by article 2 of the Vienna convention on the right of international treaties, meaning the "international agreement" signed between the states in writing and regulated by international law irrespective of whether such agreement contains in one document, in two or several documents connected among themselves, and also irrespective of its specific name.

The agreement is the international treaty and according to provisions of the Law of the Kyrgyz Republic "About international treaties of the Kyrgyz Republic" of April 24, 2014 64, Article 2 of which it is provided No. that the international treaty of the Kyrgyz Republic is the international treaty which entered in the procedure established by the law and other regulatory legal acts of the Kyrgyz Republic force which participant is the Kyrgyz Republic, representing the equitable and voluntary agreement of the Kyrgyz Republic with one or several states, the international organizations or with other subjects of international law concerning the rights and obligations in the field of the international relations.

Article 11 of the Vienna convention on the right of international treaties determines methods of expression of consent of the state to obligation of execution of the international treaty which can be expressed by means of agreement signature, exchange of the documents forming the agreement, ratification of the agreement, its acceptance, approval, accession to it or any other method with which the parties agreed.

According to the conventional principles of international law methods of expression by the state of the consent to be bound of accomplishment of the international treaty have identical legal force and attract identical legal effects. Application of one of such methods excludes in subsequent possibility of application of other method as consent is already expressed.

In the Agreement the method of expression of consent to be bound of its application by the Kyrgyz Republic, such as signing is specified that answers provisions of article 12 of the Vienna convention on the right of international treaties, and also the legislation of the Kyrgyz Republic regulating procedure for the conclusion and entry into force of international treaties.

It should be noted that according to article 10 of the Law of the Kyrgyz Republic "About the conclusion, ratification, execution and denouncement of international treaties of the Kyrgyz Republic" ratifications were subject the international agreements of the Kyrgyz Republic on friendship, cooperation and mutual aid; about mutual refusal of use of force or threat of force; peace treaties; agreements on territorial differentiation of the Kyrgyz Republic with other states; agreements on mutual recognition and establishment of diplomatic relations; agreements on provision by the Kyrgyz Republic of state loans, economic and other help to foreign states; agreements on provision to the Kyrgyz Republic of state loans, economic and other help; the agreements determining other rules, than those which contain in the legislation of the Kyrgyz Republic. Similarly ratifications were subject the international agreements of the Kyrgyz Republic in case of which conclusion the parties agreed with the subsequent ratification.

At the time of agreement signature of its condition did not contain the regulations determining other rules, than those which contained in the legislation of the Kyrgyz Republic.

So, the Law of the Kyrgyz Republic of July 24, 1998 No. 103 ratifies the Agreement between the Kyrgyz Republic and the Republic of Tajikistan on the principles of collection of indirect taxes during the exporting and commodity import (works, services) of May 6, 1998. Article 2 of the specified Agreement determines the principle of collection when exporting which meant that one Contracting Party will not assess with indirect taxes the goods (works, services) exported to other Contracting Party. The rule is applied to the value added tax and means application of zero rate according to the principle of destination.

The law of the Kyrgyz Republic of April 10, 1998 No. 41 ratifies the Agreement between the Government of the Kyrgyz Republic and the Government of the Republic of Uzbekistan on the principles of collection of indirect taxes during the exporting and commodity import (works, services) of September 20, 1997. Article 2 of the specified Agreement determines the principle of collection when exporting which meant that one Contracting Party will not assess with indirect taxes the goods (works, services) exported to other Contracting Party. The rule is applied to the value added tax and means application of zero rate according to the principle of destination.

The law of the Kyrgyz Republic of July 21, 1997 No. 55 ratifies the Agreement on the principles of collection of the value added tax during the exporting and commodity import (works, services) between the Government of the Kyrgyz Republic and the Government of the Republic of Kazakhstan of February 18, 1997. Article 2 of the specified Agreement determines the principle of collection when exporting which meant that one Contracting Party will assess with the value added tax on zero rate goods (works, services) exported to other Contracting Party.

Besides, the regulations on non-use by contracting parties of the customs duties, and also the taxes and fees having with them equivalent action, and quantitative restrictions on import and (or) commodity exportation, occurring from customs area of one of Contracting Parties and intended for customs areas of other Contracting Parties are enshrined in article 3 of the Agreement on creation of the free trade area of the April 15, 1994 operating at the time of agreement signature. The procedure for application of indirect taxes fixed by the article 8a of the specified Agreement on creation of the free trade area meant that Contracting Parties in mutual trade do not assess with indirect taxes (the VAT, excises) the goods (works, services) exported from customs area of one of Contracting Parties on customs area of other Contracting Party. The called provision means VAT liability on zero rate, and also release from excises of the exported goods.

According to Item 3 of article 12 of the Constitution of the Kyrgyz Republic adopted at the twelfth session of the Supreme Council of the Republic Kyrgyzstan of the twelfth convocation on May 5, 1993 operating at the time of entry into force for the Kyrgyz Republic of the stated above Agreements, the interstate agreements ratified by the Kyrgyz Republic were the compound and direct operating part of the legislation of the Kyrgyz Republic.

Thus, considering that provisions of the Agreement did not contain the regulations other than regulations of the current legislation and as the Agreement does not provide the procedure of its subsequent ratification, this Agreement became effective and is subject to strict observance from the moment of its signing, that is since June 17, 1999.

Since January 1, 2009 the Tax code of the Kyrgyz Republic which Section VII imposes the sales tax which is not provided by earlier existing tax legislation became effective and also the procedure for application of the value added tax is changed.

The law of the Kyrgyz Republic "About enforcement of the Tax code of the Kyrgyz Republic" does not contain regulations on giving of retroactive effect to regulations of the Tax code of the Kyrgyz Republic.

The law of the Kyrgyz Republic "About international treaties of the Kyrgyz Republic", and also the provisions of international law reflected in the Vienna convention on the right of international treaties do not contain requirements about application of ratification procedure to the international treaty which became effective earlier otherwise if in subsequent there were changes in the national legal system.

Thus, the above-stated change of the tax legislation is not the basis for review of procedure for entry into force of the Agreement and contest of applicability of its provisions.

At the same time it should be noted that the fundamental principle of the right of international treaties established by article 26 of the Vienna convention on the right of international treaties is the principle of Pacta sunt servanda (Latin the agreement shall be observed), meaning strict accomplishment of the contractual commitments by the states irrespective of internal or external factors. Article 27 of the called Vienna convention establishes one more conventional principle of international law meaning impossibility of the agreement party to refer to provisions of the internal law as justification for failure to carry out of the agreement by it.

The similar principles contained in article 16 of the Law of the Kyrgyz Republic "About the conclusion, ratification, execution and denouncement of international treaties of the Kyrgyz Republic", determining that the international agreements of the Kyrgyz Republic are subject to strict observance by the Kyrgyz Republic according to regulations and the principles of international law. In case of contradiction of any regulations of the international treaty of the Kyrgyz Republic to the legislation of the Kyrgyz Republic the precept of law enshrined in the international treaty is effective.

The principle of obligation of execution of the international treaties which became effective for the Kyrgyz Republic found reflection in article 32 of the Law of the Kyrgyz Republic "About international treaties of the Kyrgyz Republic".

Proceeding from the specified regulations, provisions of the Agreement are subject to strict observance from the moment of the introduction of the Agreement in force, namely - since June 17, 1999.

It is also necessary to note that by part 1 article 3 of the Tax Code of the Kyrgyz Republic it is determined that if the international treaty which came in the procedure established by the law into force which participant is the Kyrgyz Republic establishes other regulations than provided by the tax legislation of the Kyrgyz Republic, then regulations of such international treaty are applied.

Thus, provisions of article 10 of the above-named Agreement which is the international treaty which became effective in the procedure established by the law which the parties agreed to make agreed decision on non-use of customs duties, taxes and other charges which are subject to payment in the budget, on overflow and transit of the electric power, performed on interstate power lines, and also for services in regulation of frequency have priority over the tax legislation and are applied to the above-stated activities.

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