On 5 July 2007, a meeting of the Expert Council of the Business Forum for Improving Fiscal Policy of the Chamber of Commerce and Industry of the Republic of Uzbekistan dedicated to the subject "Oil and Gas Taxation in Uzbekistan" was held in the conference hall of the Grand Orzu Hotel.

The resource extraction industry, which includes the oil and gas sector, is a priority in developing the Uzbek economy. The taxation system is an important factor determining development and competitiveness of extraction sectors.

Currently, 190 hydrocarbon deposits have been found in Uzbekistan. Majority of these deposits, particularly oil deposits, have low daily oil production indicators. Yet the existing extraction companies’ taxation system, including general and specific taxes, does not take these factors into account and creates a high tax burden, which substantially increases when production factors worsen.

Many oil-producing countries encountered reduced oil production at high operating costs. Hence, creating a flexible and differentiated tax regime that can react to changes in economic and natural conditions of developing deposits is becoming ever more relevant.

Business Forum has been arranged in order to identify issues of taxing extraction companies and develop proposals aimed at increasing the taxation system’s effectiveness through dialogue with representatives of government institutions and resource extracting companies, and through discussion of the UNDP Policy Paper titled "Improving Taxation System for Resource- Extraction Companies".

At the same time, Business Forum has set an objective to develop necessary preconditions for further tax reforms of resource-extracting companies.

The Chamber of Commerce and Industry of the Republic of Uzbekistan, the United Nations Development Programme "Public Finance Reform"and "Business Forum of Uzbekistan" Projects jointly hosted this event.

Ministry of Finance, State Tax Committee, and Chamber of Commerce and Industry officials, domestic oil and gas industry officials, and taxation and tax administration specialists participated in the Business Forum.

Issues related to taxing resource-extracting companies were discussed and general and specific taxes typical for the oil and gas sector were considered during the course of the event. Special focus was put on the following issues: tax administration, improving the resource extraction tax, the feasibility of differentiated rates or the introduction of a flat tax rate on resources, and coefficients used in differentiating these rates.

Hot debates unfolded during the discussion of squaring out taxation terms for foreign and local companies and abolishing benefits for foreign investors.

The exchange of opinions and ideas that took place during the event led to the development of specific recommendations and proposals for taxing resource-extraction companies, which will be reflected in the UNDP Policy Brief on Improving Taxation of Resource Extracting Companies.