8. What taxes are payable by companies carrying on mining activities?

Commonly, the activity in the natural resources sector in the Kyrgyz Republic falls within the general tax regime, involving the payment and reporting for the following types of taxes for local companies and foreign companies operating in the Kyrgyz Republic through a permanent establishment:

- profittax (10%);
- incometax (10%);
- VAT (general rate is 12%, for some operations 0% or 20%);
- excise tax (ranges according to the type of excisable goods, the price or volume);
- sales tax (from 1% up to 3%).

On September 17, 2012 amendments to the Tax Code of the Kyrgyz Republic entered into force, according to which taxpayers involved in activities on mining and sale of gold ore, gold concentrate, gold alloy and refined gold shall not pay profit tax. The said persons shall pay tax on income at the rate ranging from 1% up to 20% (depending on the world price for one troy ounce), applied to:

- revenue (excluding VAT and sales tax) from the sale of gold alloy and refined gold; or
- value of gold in the gold-bearing ore and gold concentrate, calculated on the basis of world prices in accordance with the procedure established by the Kyrgyz Government.

Foreign organizations with no a permanent establishment in the Kyrgyz Republic receiving income at source in the Kyrgyz Republic, are subject to tax on income at the following rates:

- 5% of the income excluding the deductions from telecommunication services, transport services, insurance payments under the insurance agreements or reinsurance of risks, and
- 10% of the income excluding the deductions from dividends, interest, copyright royalties, royalty, insurance payments under the compulsory insurance agreements or reinsurance under compulsory insurance of risks, income from management services, advisory services and other services and works.

This type of tax shall be withheld by the tax agent, i.e. person paying the income.

Additionally, subsoil users pay taxes for subsoil use: bonus and royalty.

Bonus is a one-time payment for the subsoil use right for prospecting, exploration and development of mineral deposits. Taxpayer of bonus is the person who obtained the right to use subsoil. The bonus is also paid in case of change in ownership shares, when changing the participants, in the amount of 10 percent or more in proportion to the share of the property (except for a change in ownership shares of companies listed on stock exchanges). The tax base for the calculation of the bonus is the amount of geological reserves and expected resources registered by State cadaster of deposits and occurrences of minerals of the Kyrgyz Republic, and the drilling depth of water wells. Bonus rate is set by the Kyrgyz Government on all types of minerals on the classification table, depending on the degree of exploration, values, and scale deposits and/or occurrences of minerals, as well as the size of the area of deposits for the search of minerals and the drilling depth of water wells. For mineral deposits, which are tendered, the rate of the bonus is determined by the Kyrgyz Government for each deposit separately.

Royalty is the recurrent payments for the use of subsoil for development purposes and/or selection (extraction from the subsoil) of groundwater. The tax base of the royalty is:

- revenue, excluding VAT and sales tax, received from the sale of mineral resources or the products received as a result of mineral resources processing;
- in-kind volume of products sold;
- volume of the underground water withdrawn according to water gauges, except for specialized water supply organizations.

Royalty rates for different minerals (other than water) and construction materials range from 1% up to 12%.