Snapshot: Mining taxes in Chile and Argentina

Lawmakers in Chile and Argentina are proposing changes in mining taxes to benefit communities and attract more investment.

Earlier this week, the mining and energy committee of Chile’s lower chamber dispatched a bill on copper and lithium mining royalties, which would introduce a 3% tax on the value of the minerals extracted for companies that produce over 12,000t of fine copper or 50,000t of lithium a year.

The committee approved that the funds collected would be invested in the development of the regions that host the deposits to mitigate environmental damage.

Major mining companies currently pay a corporate tax of 27% plus a specific mining tax of 5-14%, depending on production rates. 

According to the government budget office, the specific mining tax accounts for 0.4% of Chile’s GPD. The mining council said the country has among the highest mining taxes in the world, being surpassed only by Australia. 

Introduced in 2005, the specific mining tax was up to 5% of operating profits, but it was raised for two years in 2010 to repair damage the earthquake that year caused. Projects with capacity of less than 50,000t of copper had to pay 9% and projects above the threshold paid 14%.

Chile’s chamber of mines, mining association and mining council see the bill under discussion as an obstacle to investments.

In the coming weeks, the proposal goes to the constitution, legislation and justice committees. Then the full house can vote on it and send it to the senate.

ARGENTINA

Argentina is focused on mining export taxes while the government considers a decrease below the current 8% on primary products, including minerals.

At the annual PDAC mining convention in Toronto this week, mining secretary Alberto Hensel revealed plans to reduce taxes depending on characteristics such as type of mineral, mine size and infrastructure in the region that host the deposits.  

According to a BNamericas report on mining in Argentina, miners pay 35% income tax, 21% VAT, and 2-3% gross revenue royalties at the provincial level.

The country's mining investment law states that mining projects get 30 years of fiscal stability - excluding VAT - from the day their feasibility study is submitted.

Executives have already asked President Alberto Fernández for more favorable conditions as their biggest concern is the return of 5% export taxes and measures that block profit outflow. This month, Fernández aims to send a new mining law to congress.