RE: To my understandingthat's partly not applicable to APE (witholding tax on dividends just 12.5% if dividends paid and royalty tax has just to be paid (12.5%) if you receive royalties.
APE Bolivia will have to pay the ICM that is a gross selling tax (about 10% of the gross value as per todays Government proposal and based on todays commodity prices). These will be deducted as a cost position and so reduces the tax base for the 25% corporate tax.
If you enhance your profitability you reduce your tax quote and if commodity prices go up the absolute profit rises depending on your profitability up to the cap at 20% ICM. Calculated an example:
At 13US$ silver equi ICM will be 10% (1.3$) and at cost quote of 50% (6.5$) we got EBT of 5.2$ - 25% corporate tax = 3.9$ net profit. 3.9$/6.5$ = 40% total tax rate.
At a cost quote of 40% the EBT is 6.50$ (13-1.3-5.2). 6.50$ -25% tax = 4.785$ net profit. 4.785$ / 7.80 $ gross profit = 37.5% tax rate.
As you can see - a higher the effciency a smaller is the tax rate...pretty good motivation though.
Some other positive tax reducers in Bolivia are:
- double tax deduction for exploration costs
- accelerated depreciation of fixed assets
- no limits in carrying forward tax losses
Further you have to consider that this is the proposal by Bolivian Government so to say the maximum taxation.
Art