The Province of Quebec has eased up a bit on its original proposal for mining taxes (such as a 30% super-profits tax), but still intends to take a decent-sized chunk out of the sector’s profits.
RENO (MINEWEB) – The Government of Quebec Monday unveiled the province’s new mining tax regime, aimed at requiring all mining operations to pay a minimum mining tax in addition to existing federal and provincial general corporate taxes.
Beginning Jan. 1, 2014, mining companies would be required to pay the greater of a fixed mining tax or a tax on profit. A minimum annual fixed tax rate would be 1% for operations producing less than Cdn$80 million in ore, and 4% for those that have produced higher valued ore at the mine shaft head.
The profit tax would set a minimum rate of 16% for mines with a profit margin of 35% or less and would increase up to 22.9%, depending on mines with a profit margin of more than 50%. The current highest royalty rate is 16%.
While Parti Quebecois originally promised to raise an average C$388 million annually over five years in mining taxes, the 25% decrease in metal prices since 2011 forced the government to reconsider its strategy, said Quebec Finance Minister Nicolas Marceau. The new mining plan would increase royalties’ revenue by 15% to a total of $370 million annually.
Depending on mining company activity and profits in Quebec, Marceau estimated the new taxation regime could generate between $73 million to $200 million a year until 2020 beginning with an additional $50 million for a total of $370 million in 2015. If mining company profits grow stronger, the government estimates the new taxation regime could generate up to an additional $1.8 billion in revenue over the next 12 years.
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