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Peru Enacts Mining Tax Overhaul

by Leroy Baker, Tax-News.com, New York

30 September 2011


Peruvian President Ollanta Humala welcomed the supportive stance of the nation's mining industry upon enacting measures to reform the country's mining tax regime at a ceremony on September 29, 2011.

The new laws, recently adopted by Congress, will establish a tax of 1% to 12% on operating profits, as well as a 'special tax' of between 2% and 8.4%, dependent on profit margins, aimed at generating increased revenues during boom years. The replacement of the previous regime, under which mining firms paid royalties at rates of between 1% and 3% on net sales, is expected to generate an extra PES3bn (USD1.1bn) annually.

Companies that have entered into tax stability agreements, such as Xstrata PLC, BHP Billiton, and Barrick Gold Corp, which shield them from future tax changes, must now pay a 'special contribution' tax of between 4% and 13.12% of profits.

The new regime will apply for a period of five years to fund infrastructure projects and create employment in the nation's poorest regions.

TAGS: tax | economics | business | mining | royalties | fiscal policy | law | corporation tax | agreements | Peru

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