January 4, 2022

New mining tax from 2022

In execution of the Decree of the President dated October 7, 2021 the President signed Law No. ZRU-741 of December 29, 2021 (hereinafter – the “Law“), according to which a special rent tax on mining will be introduced from January 1, 2022. Taxpayers of this tax are legal entities extracting precious, non-ferrous and (or) radioactive metals, rare and rare earth elements and (or) extracting them from man-made mineral formations, as well as extracting hydrocarbon raw materials. In addition, it is important to note that a special rent tax is applied to license areas where the extraction of metals and hydrocarbons will begin after January 1, 2022.

In addition, it is important to note that taxpayers are not legal entities operating under production sharing agreements.

The minimum tax rate for this tax is set at 25% of the tax base. However, when putting up for competitive bidding the right to use a subsoil plot for geological exploration or production on a previously explored subsoil plot for individual objects for metals or hydrocarbon raw materials that have significant commercial potential, the organizer of competitive bidding or participants in competitive bidding have the right to offer an increased tax rate.

Enterprises with foreign investments that are taxpayers of a special rent tax on the extraction of minerals have the right to keep tax records for tax purposes in US dollars according to the accrual method.

In addition, according to the Law, it is provided for:

reduction of tax rates for the use of mineral resources for oil and natural gas up to 10%; gold and copper – up to 7%, tungsten – up to 2.7%, uranium – up to 8%.

We would like to remind you that earlier by the above-mentioned Presidential Decree it was established that from January 1, 2022, land plots allocated for geological exploration and (or) survey work are not subject to taxation by land tax from legal entities.

Moreover, legal entities engaged in geological exploration, as well as contractors and subcontractors involved by them, were exempted from:

  1. periodic customs payments for temporary importation of special equipment necessary for geological exploration, for the period of prospecting, exploration and development of deposits;
  2. customs duties on the import of equipment, material and technical resources and special equipment not produced in the Republic of Uzbekistan, necessary for carrying out work on prospecting, exploration and development of deposits according to the lists formed in accordance with the established procedure.

In addition, from October 1, 2021, an order was introduced according to which, when selling natural gas for export, the excise tax rate is set at 0%. Also, when importing natural gas into the territory of the Republic of Uzbekistan, legal entities are exempt from customs duties.