Centerra says recent tax claims from Kyrgyzstan 'without merit'
According to the company's statement, the claims include: a claim for approximately U.S.$106 million related to withholding taxes on dividends paid to its direct parent company, Centerra, during the years 2016 and 2017; and a claim for approximately U.S.$17 million related to payroll deductions not withheld by KGC on certain national employee compensation during the years 2016 and 2017.
Centerra added that each of these claims was initially raised by the State Tax Service in 2018 but subsequently withdrawn or terminated pursuant to decisions of the State Tax Service in March 2018. The State Tax Service has now annulled its previous decision in order to revive such claims.
The State Tax Service has also made a claim against KGC for approximately U.S.$23 million in relation to payments to the Kyrgyz Republic Social Fund during the years 2011 through 2017. Again, such a claim is in direct contradiction to the conclusions of the State Tax Service itself from previous years which confirm that Kumtor Gold Company had no outstanding Social Fund payments, said Centerra.
The amounts of each of the foregoing claims include significant penalties and / or sanctions assessed by the State Tax Service, in some cases more than half of the total amount claimed.
Centerra noted that the 2009 restated project agreements which govern the Kumtor mine contain a specific tax and fiscal regime applicable to the Kumtor mine. That tax and fiscal regime provides, among other things, that no taxes are payable by KGC on intercompany transactions with Centerra, including dividends.
The company pointed out that it is studying the claims but believes they are exaggerated or without merit. KGC has also received requests from the State Tax Service to re-audit KGC's financial accounts for 2014 through 2019. The company is disputing the State Tax Service's ability to carry out such re-audits.
Centerra Gold is a Canadian-based gold mining company operating three mines, the Kumtor mine in the Kyrgyz Republic, the Mount Milligan mine in British Columbia, Canada and the Öksüt mine in Turkey.