Peru To Charge Another Tax on Mines
August 26, 2011 Taxation in Peru
Peru is set to see nearly PEN 3 billion in new tax revenues every year, as the government announces a new mining tax to be imposed in the country.
In an address to the Congress of Peru on August 25th the country’s Prime Minister Salomon Lerner Ghitis said that an agreement has been reached with the nation’s mining sector regarding the issue of a new windfall tax. The new tax comes as a fulfillment of the campaign promises made by President Ollanta Humala to raise new funds for development projects around the country.
In the near future mining companies operating in Peru will face an extra windfall tax, and the new levy will be charged on companies’ operating profits. The exact rate at which the tax will be imposed has not yet been revealed, but is expected to be finalized over the coming weeks. However, the Prime Minister did say that the tax will be variable, and set according to the companies operating margin.
The Prime Minister said that the new tax is expected to raise an additional PEN 3 billion (USD 1.1 billion) per year, for the next five years. The raised revenues will be used to fund development projects and social spending programs run by the Peruvian government. The new tax follows the President’s long standing promise to increase taxes on the country’s significant mining sector, in order to address the levels of poverty in Peru, where nearly one third of the population is considered to be poor.
Currently, mining companies operating in Peru are required to pay a resource royalty tax of up to 3 percent, which is charged on their sales. Mine operators are also required to pay the country’s standard income tax rate of 30 percent.
Several mining companies in Peru currently hold stability agreements with the government, shielding them from any tax changes or new taxes, but these enterprises have already agreed to voluntarily pay the new tax.
Photo by rocbolt