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Mining Tax Reform Sparks Protest In Peru

by Mike Godfrey, Tax-News.com, Washington

03 November 2008

The announcement of a new tax regime designed to re-classify the way in which Peruvian mines are taxed has caused a large-scale protest amid claims that the new system is unfair.

The bill, which has been provisionally passed by parliament, has caused outrage in the province of Tacna because the legislation calls for a substantial proportion of mining tax revenues to be diverted to the southern province of Moquegua.

Currently, the government taxes mines according to the quantity of earth each one moves. The new legislation will change this, taxing instead the quantity of mineral wealth retrieved by each mine.

Objection to the new legislation has been such that a series of blockades and violent protests have taken place in Tacna. However, the legislation could undergo several revisions ahead of its second reading. The bill also has to be signed by President Alan Garcia before passing into law.

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