Mine taxation Flashcards
represent a substantial cost of doing business in the minerals industry and often have a significant impact on corporate investment decisions
Taxes
effect of higher taxes
reduce project yields and tend to drive investment capital elsewhere.
is based on the concept that minerals are a free giftof nature for the benefit of all mankind, and therefore the benefits derived from resource extraction should be shared by all.
Natural Heritage
assumes that since an ore body cannot be dismantled or moved to another location, any mine can be taxed with impunity.
Captive Theory
Taxes are generally implemented to achieve one or more of the following objective
> Raising Revenue
Economic Development
Price Stability
Wealth Redistribution
Regulatory Medium
Taxes are generally imposed on one of the following bases:
- Income
2 Wealth
3 Expenditures
4 Activity
Special Features of Mining
• Bonanza image
• High risk
• Economic rent
• Exhaustibility
• Capital intensity, long lead times
• Uncertainty in determination of ore deposit value
• Indestructibility of metals
• Rental payments
Usually based on net income, or gross income less certain defined deductions. The tax rate is generally either fixed or progressive (i.e., higher levels of net income pay higher tax rates.)
Income Tax
Typically an ad valorem (according to value) tax based on appraised value of real and personal property
Property Tax
A tax unique to the extraction of natural resources (renewable as well as nonrenewable) and commonly considered to be an excise tax.
Severance Tax
A tax imposed upon the consumption of a retail sale.
Transaction Tax
A tax imposed on the manufacture, sale, or consumption of specific, selected commodities and/or activities
Excise Tax
referring to equal treatment of similarly situated taxpayers
Equitable
referring to a tax that can be readily and easily assesses, collected, and administered.
covenient
referring to consistency and stability in the prediction of tax-payers’ bills and the amount of revenue collected over time.
Certain
referring to the fact that compliance and administration of a tax should be minimal in terms of cost
Economical
referring to the fact that a tax should have the ability to produce a sufficient and desired amount of revenue to the taxing authority.
Adequacy
referring to the use of taxes to reallocate resources in order toachieve various specific social and economic objectives
Achievement of social and economic effects
recognizing that a tax should not encourage inefficient allocation of resources by being so extreme that taxpayers make counterproductive economic decisions
Neutrality
total income derived from product sales
Revenue
an amount deducted from revenue to arrive at taxable income.
Deduction
the amount on which a tax is calculated
Taxable Income
a deduction over a period of y
Depreciation
any deduction other than depreciation or depletion allowed over a period of years
Amortization
an expenditure treated as a deduction in the year it is made
Expense
to save an expenditure for deduction in one or more later years.
Defer
to establish an account for an expenditure which, depending on the type of expenditure, may or may not qualify as a deduction.
Capitalize
the act of foregoing a deduction until some amount of money is recouped; is generally associated with an amount of money which was previously expensed, but which should have been capitalized.
Recapture
the amount in a capitalized account at any point in time. The original basis is usually the cost of an asset.
Basis
an outflow of money for the purchase of goods or services
Expenditure
3 types of Expenditures for Tax purposes
> expenditures for items which are consumed in one year and are non-recoverable
expenditures for assets which are consumed more gradually and are nonrecoverable
expenditures for asses which are not consumed and are recoverable after the end of the project.
If the Basic Government Share is less than 50% of the
Net Mining Revenue, an _____________________
to increase the total government share to 50% of the
Net Mining Revenue must be paid by the FTAA holder.
(grabe pangwarta sa gobyerno ah)
Additional Government Share
EPEP stands for
Environmenal Protection and Enhancement Program
EPE is equivalent to ______ of Total Project Costs
10%
the operational link between the environmental protection and
enhancement commitments under the Mining Act revised
implementing rules and regulations as well as those stipulated
in the ECC and the Contractor’s plan of mining operation
EPEP
to implement its AEPEP, FTAA holder must allocate
annually _______ of its direct mining and milling cost
depending on the environment/geologic condition, nature
and scale of operations and technology employed in the
FTAA Area.
3%-5%
CLRF
Contingent Liabiloty and Rehabilitation Fund
MTF
Monitoring Trust Fund
The Mutipartite Monitoring Team consists of
Govt representatives, affected community, contractors, ICC/IP, NGOs
RCF
Rhabilitation Cash Fund
established to ensure compliance with the approved
rehabilitation activities and schedules for a specific
mining project phase, including research programs as
defined in the EPEP and/or AEPEP
RCF
consists of a replenishable amount of at east PHP50,000
Envi. Trust Fund
mine waste and tailings fees collected semiannually based on
the amounts of mine waste and mill tailings generated for the
said period.
Mine Waste and Tailing Fees Reserve Fund
mining contractor must make annual contributions to an____________ in accordance
with the contractor’s mandatory Final Mine Rehabilitation and
Decommissioning Plan (FMRDP) and must contain cost estimates, taking into
consideration expected inflation, technological advances, the unique
circumstances faced by the mining operation, among others.
Final Mine Rehab and Decomissioning Fund
Royalties paid to Ips/ICC
not less than 1%
of the Mining Act provides that contractors in mineral
agreements and FTAAs shall be entitled to fiscal and non-fiscal incentives as
provided in the Omnibus Investments Code or EO 226, as amended.
Chapter XVI
