Congress to review royalty proposal in Jan.

Bnamericas Published: Thursday, December 16, 2004
Chile's congress will review the executive branch's new proposal for a royalty on mining operations in January, the lower house announced. The proposal will be reviewed in three areas: the duration of the tax stability guarantee; the level of the rate of tax; and the size and rate of credit that will apply during the first years. Chile's finance minister Nicolás Eyzaguirre said the government's decision was "to follow the procedures that correspond to any law - the executive presents a project with its view on the subject and this is subsequently debated in parliament." However, he emphasized it is possible to revise some aspects raised relating to the rate, the invariability and the credit during the first years. "Eventually, we could revise some of these questions but obviously during the discussion in parliament," said Eyzaguirre. The government proposal establishes that a 5% tax on operating profits will only apply to miners with sales of over US$5mn and a minimum operating margin of 8%. The measure also allows for 50% of the royalties to be set against corporate tax during 2006 and 2007, when the measure would take effect, meaning around US$96mn is expected to be collected in each of those years.

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