Mining industry Standing What is the nature and importance of the mining industry in your country?

Are there provisions in law dealing with government expropriation of licences? What are the
compensation provisions?
The Subsoil Law is silent on expropriations of licences by the government. However, the Law on
Guarantees and Measures for Protection of Foreign Investors’ Rights dated 30 April 1998 (Law on
Protection of Foreign Investors’ Rights) provides that foreign investments and any other assets of
foreign investors located in Uzbekistan cannot be nationalised or confiscated, except in the instance of
natural disasters, accidents, epidemics and epizootics. In the event of nationalisation in the said
circumstances, the government is obliged to provide the affected foreign investor with compensation
of an amount equal to the damage caused as a result of such nationalisation. The law further provides
that the state shall be a guarantor of timely payment of such compensation to the foreign investor.
Protected areas
Are any areas designated as protected areas within your jurisdiction and which are off-limits or
specially regulated?

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Yes, there are certain areas that have special status and where mining works may be either prohibited
(for example, in natural parks) or restricted (for example, in frontier zones and certain types of
agricultural land).
Duties, royalties and taxes
Duties, royalties and taxes payable by private parties
What duties, royalties and taxes are payable by private parties carrying on mining activities? Are
these revenue-based or profit-based?
Uzbekistan’s Tax Code specifies several special taxes payable by subsoil users, including mining
companies, in addition to general taxes such as corporate income tax (14 per cent), VAT (20 per cent),
social tax (25 per cent), excise and customs duty, tax on petrol and other mandatory duties, as follows:
subsoil-use tax (gold: 5 per cent; copper: 8.1 per cent; uranium: 10 per cent and coal: 4 per cent)
is calculated on the value of the mineral resources produced and is payable on a quarterly basis
for small entities and on a monthly basis for other types of entities. The value of the mineral
resources for purposes of subsoil-use tax is generally determined using the average weighted
sales price for the reporting period;
subscription bonus (gold: 10,000 times the minimum monthly wage (MMW); copper: 1,000 times
MMW and uranium 500 times MMW) is a one-time fixed payment to the state for the right to
explore and extract minerals in accordance with a subsoil-use licence;
commercial discovery bonus (0.1 per cent) is a fixed payment that is payable by subsurface
users when a commercial discovery is made in the licensed territory. The rate of the commercial
discovery bonus is determined on the basis of the value of proven extractable reserves (the value
of the mineral resources is generally determined using the market price established at
international exchanges);
excess profits tax (50 per cent) is payable in respect of certain types of minerals, which are
determined in accordance with legislation (in 2018, only natural gas, copper, cement, clinker and
polyethylene pellets were subject to excess profits tax); and
PSAs (the Uzbek Tax Code specifies the special tax regime for foreign companies conducting
activities under PSAs. Thus, a foreign investor, its contractors and subcontractors under a PSA
are exempt from payment of all types of taxes and mandatory duties with regard to exploration
activities. Further, during the period of the PSA a foreign investor is required to pay corporate
profit tax, land tax, water use tax, excise tax, social tax and special taxes for subsoil users
(subscription bonus and commercial discovery bonus), excluding excess profits tax. Incentives
granted to a foreign investor under the PSA are exemption from payment of VAT and property tax
and exemption from customs duties that would otherwise be levied upon imported goods and
works purported for activities under the PSA and upon export of products belonging to a foreign
investor in accordance with the PSA).
A non-resident company operating or acting through a permanent establishment must pay a profit tax
from its activity in Uzbekistan at the rate of 14 per cent. Domestic parties are not subject to this tax,
although they must withhold 10 per cent withholding tax from dividends distributed to their foreign
shareholders (the rate of dividends withholding tax may also be reduced under relevant double tax
treaties).

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No special tax incentives, excluding the incentives under PSAs referred to above, are generally
available to companies conducting mining activities in Uzbekistan. However, it may be possible to
negotiate tax incentives directly with the state. These are granted by special resolutions of the
President of the Republic of Uzbekistan.
Tax advantages and incentives