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Indian Business Opposes New Mining Taxes

by Mary Swire, Tax-News.com, Hong Kong

25 August 2011


The government’s proposal to impose a 26% tax on profits from coal mining will make the industry the most heavily taxed in the world and globally uncompetitive, industry body the Associated Chambers of Commerce and Industry of India (ASSOCHAM) has said in a representation to the prime minister.

The tax has been proposed as an amendment to the Mines and Minerals Development and Regulation (MMDR) Act and the revenues collected will flow into a development fund to help poor communities in India's mining regions. Under the proposals, mining companies contribute 100% of their royalty payments to the fund.

ASSOCHAM warns that the total tax rate faced by mining firms will be more than 60% in the case of coal and 55% in the case of iron ore, far higher than in other resource-rich countries like Australia, Congo, Russia, China and Chile.

According to ASSOCHAM, Canadian and Australian companies have already expressed concern over the Indian government proposals because the industry is likely to pass on the additional burden to in the form of higher prices.

TAGS: tax | business | India | mining | royalties | tax rates

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