BISHKEK(BullionStreet): Months after passing a new mining law, central Asian republic Kyrgyzstan said it will also impose a new tax on incomes from gold ore sale.

The new tax to be collected from next year is based on 'The higher the world gold price, the higher tax rate' policy.

As per the new tax a subsoil user has to pay tax for “license withholding or its resale”, which is imposed “subsoil users not to keep licenses for years, but start mine development”.

There used to be serious problems with the mining licensing process in Kyrgyzstan as some mining companies would just sit on the land once they’d bought it, and avoid making the capital investments needed to build a mine.

They then hoped to sell the land on at a higher price than they had paid for it. Some hope that the news laws will put a stop to this kind of activity .

Kyrgyzstan has enormous potential in terms of gold and copper production. But owing to corruption and a lack of government oversight of mines in the country, Kyrgyzstan's government has in the past failed to reap the benefits in terms of mining tax revenue.

Analysts said out of the nearly 800 companies operating in Kyrgyzstan, only 300 will be able to survive the new tax regime – with the government hoping that lots of fraudulent operations are thrown out of business.