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Monday, 26 November 2007

Mineral Royalties Watch (Bolivia)

Reuters are reporting some interesting developments in Bolivia, where the Bolivia's Congress approved a reform to the mining tax code late on Friday that will substantially increase taxes on mining companies operating in the South American country:

Mining ministry spokesman Alfredo Zaconeta told Reuters the reform means mining companies will have to pay 37.5 percent of their income to the Bolivian state, up from 25 percent in the past. The decision will affect several major global mining companies working in Bolivia, including U.S.-based Apex Silver Mines Ltd and Coeur d'Alene Mines Corp.

The tax reform also broadens the scope of the Complementary Mining Tax (CMT) -- which acts like a royalty -- to include minerals that currently do not pay the levy, like indium and wolfram. Zaconeta said the royalty tax will be directly proportional to the price of the mineral in the international market. Currently, it ranges from 1 percent to 10 percent. The reform also aims to close a legal loophole that grants miners hefty discounts on income tax payments, Zaconeta said.

2 comments:

  1. It gets even more interesting.

    It seems that in order to increase it's taxes to 37.5%, Bolivia has left the IMF/World Bank's ICSID mechanism. (From the MineWatchZambia blog:)

    http://www.worldbank.org/icsid/highlights/05-16-07.htm

    On May 2, 2007, the World Bank received a written notice of denunciation of the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (the ICSID Convention) from the Republic of Bolivia.

    In accordance with Article 71 of the ICSID Convention, the denunciation will take effect six months after the receipt of Bolivia’s notice, i.e., on November 3, 2007.

    In its capacity as the depository of the ICSID Convention, and as required by Article 75 of the ICSID Convention, the World Bank has notified all ICSID signatory States of the Republic of Bolivia’s denunciation of the ICSID Convention.

    ReplyDelete
  2. I think there's a prior question. To what extent has the Government considered the possibility of using the ICSID?

    ReplyDelete

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