New Mine Tax in Peru by End of the Year

August 3, 2011 Taxation in Peru

Tax on Mining in PeruPeru is currently discussing a new tax on mining projects, in an effort to raise more funds for the country’s poorest regions.

In a series of interviews held with national media on August 1st the Finance Minister of Peru Luis Miguel Castilla revealed that the government hopes to instate a new tax on mining operations in the country by the end of the year.

According to the Minister, the introduction of the new tax is one of the primary short term priorities for President Ollanta Humala, who took office on July 28th. Prior to the election, the Ollanta Humala-led Gana Peru Party began holding talks National Mining, Oil and Energy Society regarding the possibility of a new tax, and now the Ministry of Finance and the Ministry of Evergy have also joined the discussions. The government currently intends to reach an agreement with the mining sector about what level of taxation may be implemented without compromising competitiveness, and allowing for healthy levels of continued investment into new mining operations. The President is also concerned about the effect of any new taxes on presently standing production obligations held by mining companies.

It is currently unknown what form the tax will take, but analysts expect that it is likely to take the form of an increase to the currently active royalty tax on company profits, or a levy on the operations’ levels of sales.

The cumulative amount of corporate taxes paid by Peru’s mining industry accounts for over 30 percent of the government’s annual tax revenues. At the moment, approximately 80 percent of these collections are used to pay for public services, and any extra revenues realized by the government will be used to provide additional benefits for the country’s social infrastructures.

Photo by tuxophil