Kyrgyzstan may strip Kumtor of tax breaks
BISHKEK. Dec 25 (Interfax) - The state commission for checking on the activities of Kumtor Operating Company (KOC), which is working Kyrgyzstan's biggest gold ore deposit, Kumtor, wants taxes on the enterprise to be increased 60%.
There was a committee results meeting in Bishkek on Tuesday, at which was presented a report on the work done, along with recommendations for the government on changes to the 2009 Kumtor deposit development agreement.
A representative of the state commission, Economy Minister Temir Sariyev, said that after the study of KOC operations it had been decided to recommend that the government raise the issue of increasing the company's taxes in 2013.
At present, the company pays a fixed tax per the agreement between the Kyrgyz government and parent company Centerra Gold of Canada. In 2013, according to the agreement, Kumtor is to pay KGS 8.153 billion into the country's budget.
The state commission recommends that Kumtor be made to pay taxes according to the rules other outfits play by and collect the taxes specified by the Tax Code, Land Code, and non-tax payment law. Member of the commission calculate that in this instance the amount of taxes the enterprise would owe in 2013 would be KGS 13.049 billion, or 60% more than per the 2009 agreement.
"Our job is to get the maximum benefit from Kumtor in the form of taxes, charges, and dividends. The Kumtor ore mine is the biggest project, which accounts for a large contribution to the economy of Kyrgyzstan. Based on this, we point out that the 2009 agreement has to be revised. We are not talking about increasing taxes. We are talking about them having to work according to our laws," Sariyev said.
For a transition from fixed taxation to common taxation, the state commission recommends that the government dedicate three months to negotiations with KOC and Centerra Gold. If the company does not attend the negotiations, the government is urged to bilaterally annul the Kumtor development agreement.
The official exchange rate for December 25: KGS 47.479/$1.