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2015-2017 EITI Report

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2015-2017 EITI Report Kyrgyz Republic EITI Report for 2015-2017 Content Executive summary ............................................................................................................................................. 3 Report on factual findings .................................................................................................................................. 6 1. List of abbreviations and glossary of terms .......................................................................................... 8 3.H Methodology and approach in EITI Report preparation.................................................................. 10 Y P 3.1 Scope of EITI Report ........................................................................................................................ 10 3.1.1E Payments and receipts to be analyzed and reconciled ................................................................... 10 R 3.1.2 Companies, whose payments are subject to reconciliation ............................................................ 11 L I3.1.3 Government authorities, that provide information on Companies’ payments ............................ 13 3.1.4N List of contextual information for description in EITI Report ......................................................... 13 K 3.2 Procedures of collecting payments data .......................................................................................... 14 \ 3.3 Payment reconciliation procedures ................................................................................................. 15 4.l Extracting industry of the Kyrgyz Republic in 2015-2017 ................................................................ 17 4.1 Legislative framework of the extracting industry .......................................................................... 17 " _4.1.1 Applicable laws and other regulations in force in 2015-2017 ........................................................ 17 4.1.2T Main legislative aspects and regulations ......................................................................................... 19 o 4.1.3 Major changes in Legislation during the reporting period ........................................................... 28 c 14.1.4 KR extracting industry reform strategy .......................................................................................... 31 6 4.2 Taxation of extracting projects ........................................................................................................ 32 1 4.2.1 Taxes and non-tax payments of extracting entities ........................................................................ 33 9 54.2.2 Tax benefits for extractive industry entities .......................................................................................... 41 4.2 2.3 Basic principles and approaches in tax administration ........................................................................ 42 2 4.2.4 Extractive Industry Tax Revenues ......................................................................................................... 44 5 "4.2.5 Other payments ................................................................................................................................. 48 4.3 Distribution of revenues from the extracting industry ........................................................................ 48 EITI in Kyrgyz Republic ........................................................................................................................ 9 4.3.1 Principles of budget law of the Kyrgyz Republic .................................................................................. 48 4.3.2 Overview of the distribution of taxes types and payments ............................................................ 49 4.3.3 Summary of the Central Treasury system ...................................................................................... 52 4.3.4 Review of Development Funds financing mechanisms................................................................... 54 4.3.5 Social packages .................................................................................................................................. 59 4.3.6 Public Finance Audit and Budget Execution Reports .................................................................... 63 4.4 State participation in extracting projects ....................................................................................... 65 4.4.1 Government agencies regulating the industry ................................................................................ 65 4.4.2 Main reforms in state management of the industry ....................................................................... 68 p. 1 Kyrgyz Republic EITI Report for 2015-2017 4.4.3 Entities with a state controlling share.............................................................................................. 69 4.4.4 The role of state entities .................................................................................................................... 73 4.4.5 State lending and quasi-fiscal expenses ........................................................................................... 76 4.5 Extractive industry licensing system ............................................................................................... 79 4.5.1 Regulatory framework governing the licensing system ................................................................. 79 4.5.2 Information about the process of issuing a license ......................................................................... 83 4.5.3 Suspension and cancellation of the license for the right to use subsoil ......................................... 88 4.5.4 Problems of transperancy and access to license information ........................................................ 90 4.5.5 Information on licenses valid and issued in 2015-2017 .................................................................. 92 4.5.6 Description of the Kumtor Mine Agreement ................................................................................ 108 4.5.7 Register of licenses and license agreements .................................................................................. 111 4.6 Information on beneficial participation in extractive projects ................................................... 112 4.7 Key industry indicators ........................................................................................................................ 119 4.7.1 Mineral Production in the Kyrgyz Republic ....................................................................................... 119 4.7.2 Major deposits and mineral reserves ................................................................................................... 125 4.7.3 Investments in Extractive industries of Kyrgyz Republic ........................................................... 139 4.7.4 Employment and salaries in Extractive industries of the Kyrgyz Republic .............................. 141 4.7.5 Export of products of the Extractive industries of the Kyrgyz Republic ................................... 143 5. Reconciliation of tax and other payments ................................................................................................. 149 5.1 Payments reconciliation results ..................................................................................................... 149 5.2 Reconciliation results for each payment ....................................................................................... 151 5.3 Results of selected procedures ....................................................................................................... 164 5.4 Reliability of data for reconciliation.............................................................................................. 169 6. Recommendations for improving the EITI reporting process ................................................................ 171 6.1 Recommendations of the current report ....................................................................................... 171 6.2 Information on the status of past recommendations ................................................................... 172 Appendix 1. Request form for companies to explain discrepancies ................................................................. 179 Appendix 2. Request form for state authorities to explain discrepancies ....................................................... 180 Appendix 3 - Request form for contextual information ................................................................................... 181 Appendix 4 - Request for information on extractive companies payments to the state ................................. 183 Appendix 5 - Request for information on beneficial ownership ...................................................................... 185 Appendix 6. Consolidated payment base for extractive companies for 2015-2017 ........................................ 187 Appendix 7. SCIESU letter on barter and license issue .................................................................................... 188 Appendix 8. List of regulatory legal acts on payments and references............................................................. 189 Appendix 9. Production volumes by companies (provided by SCIESU) .......................................................... 191 Appendix 10. Payments by company ...............................................................................................................
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