Chile and Argentina Propose to Adjust Mining Taxes on Lithium, Copper

On lithium and copper mining taxes, the mining and energy committee of Chile's lower chamber dispatched a bill last week, 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. Similar initiative has also adopted in Argentina. The funds would be used to invest in the area where the mine is located to reduce the environmental damage caused by mining.

Major mining companies currently pay a corporate tax of 27% in Chile and plus a specific mining tax of 5 to 14%, depending on capacity. According to statistics from the Chilean Government Budget Office, special mining tax revenue accounts for 0.4% of the country's GDP. The Chilean Mining Commission considers the country to have one of the highest mining tax rates in the world, being surpassed only by Australia.

Special mining taxes have been levied since 2005, and mining companies have to pay tax rates of up to 5% based on operating profits. However, in 2010, to make up for the 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%.

The Chile's chamber of mines, mining association and mining council all consider the bill currently under discussion as a barrier to mining investment. In the coming weeks, the proposal will go to the constitution, legislation and justice committees. The full house then can vote on it and send it to the senate.

Argentina's legislation focuses on export taxes, and the government is considering adjusting the export tax rate on primary products, including mineral products, to below 8%.

Argentine mining secretary Alberto Hensel announced last week at the annual exploration and developers conference in Toronto that tax cuts will be made based 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, mining companies in Argentina are required to pay 35% income tax, 21% value-added tax, and 2 to 3% of their royalties. 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.

Mining company executives have asked President Alberto Fernández to give more favorable mining policies. Their concerns are the Argentine government's resumption of 5% export tax on lithium, copper, and other measures, as well as measures to prevent the outflow of profits. This month, Fernández aims to submit a draft new mining law to Congress.

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