Postcard from Bishkek

I was late to a meeting the other day … that’s nothing unusual – after all, this is Kyrgyzstan where people seem to have a different sense of time.  Still. it made me feel a little uncomfortable, especially as I know how annoying I find it when people turn up late and so I usually  try to arrive on time – or a little early.

As it happens, I wasn’t the last to arrive and the meeting hadn’t yet started … and, anyway, I felt that I had a good excuse - or maybe even a couple – for my tardiness.  

Although I had been ready to leave for the meeting in plenty of time … a problem arose in the middle of the afternoon and four of us were running around trying to solve it … in the end, someone turned to me and said: “You’re meant to be in a meeting … GO!” and so I left the others, some talking to different people on the phone and others frantically typing letters.

When I did finally leave, I found myself stuck in the evening rush hour traffic jam.  Even that wasn’t critical … but as we pulled up to cross over from the city center to the Southern part of town … the lights on the level crossing began to flash and the operator pushed the button so that the “automatic” gates of the level crossing descended … with us stuck on the wrong side … waiting for the train to pull out the station.

The problem? … oh, a little problem over income tax.

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Each  month we have to pay five taxes, sometimes more.  For each tax there is a separate date for payment, and then another for handing in the otchot - a report – to the authorities.

The tax authorities give us the details of where to pay.  We can do it by bank transfer, by my accountant is a little reluctant to do that.  Some years ago she trotted off to the bank, waited in the queue to be served when it was her turn to be served, handed over the payment order over the counter to the teller … and having got it duly stamped stamped went off to the tax office to hand in the report.  Then, at the end of the month, she was horrified to discover that we had been fined … for late payment.  or rather for reporting the payment before the money actually arrived in the budget.  It seems that the queue had been so long and slow moving, when the paperwork was processed, it was too late for it be included in that day’s processing … and was duly processed the next working day, arriving in the tax office’s account a day later.

The experience proved to be such a shock to her that she resolved to always pay a few days early … and wait a couple of days before handing in the report to give the money time to work it’s way through the banking system.

We’ve also had several other experiences where something went wrong (maybe an account number was wrongly transcribed from one form to another) and money was trapped in the system for some time – and we don’t need that sort of problem, she says.  Better to pay the money straight into the account of the tax authority than have it leave our account and then float around the system for some time … accruing fines and other penalties every day until it finally finds its way to its rightful destination.

 

For many years this has worked smoothly and without incident – but over the last couple of months we have experienced a number of problems.

It seems that the bank has introduced a new system … we were told that it’s fairly technical but it shouldn’t make any difference on a day to day basis.  However, it doesn’t seem to have worked out exactly like that.

Last month we went through the normal procedures … and, as far as we were aware, everything seemed fine … until, that is, we made the last of the payments for April and went to get a statement of our tax account.  It seems that one payment hadn’t gone through and so we were facing a problem because we had reported that we had paid a sum of x-thousand som, but the account showed that it hadn’t been received so were in debt … and there would be a fine and penalties accruing.

“But, …”, we said, “we’ve paid … here’s the bank slip to show it …”.  Now the tax officer was very good and started searching through  the records … eventually finding the money, arranging it to be transferred into the right account … and annulling the fines and penalties.  We also discovered that, in fact, we were not alone … that there were several other firms in the same position.

“It was just a teething problem connected with the introducing the new system”, we kidded ourselves … but, with hindsight, I think we can now say … “maybe not!”

This month, another tax payment – this time income tax – went missing.  Curiously, however, the Sales Tax payment that we made at the same time, in the same place … found its way into the right account with no problem … but the income tax payment was nowhere to be found.

This time the tax officials  responsible for our company were less sympathetic … they looked at the slip and tried to find the money in their records … but they couldn’t.  ”Take it up with the bank.” they said, “It’s your problem, not ours.”

In a way, they are right … in Kyrgyzstan our obligation before the budget is fulfilled once the money is deposited in the tax office’s account … not when it leaves our account or we pay into the banking system … it hadn’t arrived so, as far as they were concerned, we hadn’t paid it.  Hence we were facing the fine and penalties … as well as a debt for tax arrears.

So, it was off to the bank to see if we could sort it out.

Now, the most obvious change of the new system seems to be that, instead of paying the money straight into the tax office’s bank account – it is now paid into a “transit account” – which serves several tax offices … it accumulates there and at the end of the day is transferred into the appropriate account. So, they searched their records and eventually found the payment … and were able to trace it … into the account of another tax office – not ours.

“OK – so transfer it to the right account”, we said.

“It’s not that simple”, came the reply … it’s already in another account so we needed to write explanatory letters in order to get permission to transfer it back …

It was at this point that I left to attend my meeting … and got stuck, biting my fingernails, at the level crossing.

The next day after lots of running around, phone calls and at least three more letters … permissions were received and the money was due to be transferred … so, I suppose it’s a case of All’s well that ends well ..

Well … almost … there’s still the question of the fine and daily accrued penalties … and also  trying to devise a way of making sure that it doesn’t happen yet again …

 

Many times in the past I have heard the mantra “Pay your taxes and sleep soundly …” from the mouths of tax officials and politicians … and, to be honest, normally I would agree with them … BUT … If only it was that simple!  We paid our taxes … but we still have disturbed nights trying to navigate the system …

I suppose that for two months running, we’ve been lucky … but I put that down to the dogged perseverance of my accountant.

 

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