Mining Royalties, A Global Study(PDF file, 2.85MB, 285 pages)
https://siteresources.worldbank.org/INTOGMC/Resources/336099-1156955107170/miningroyaltiespublication.pdf
portion of the Forward:
"Of the issues currently debated in the international mining industry, none is as pertinent and possibly challenging as mining taxation. At this moment of high commodity prices, in early 2006, many mining companies—juniors and majors, local and international—are stepping up their exploration activities into countries where there is little experience with mining legislation or taxation. Governments face the need to devise and implement appropriate and modern tax regimes. Even in countries with experience in minerals exploitation, public perceptions of company windfall profits often provoke calls for renegotiation of contracts or revisions in taxation legislation. In matters of mining taxation, governments rarely believe that companies pay too much tax; companies rarely believe that they pay too little tax; and citizens rarely believe that they actually see tangible benefi ts from the taxes that are paid.
Behind these rather simplistic perceptions, however, there is the very complex topic of how mining taxes are devised, assessed, paid, and accounted for. One of the main forms of government income from mineral exploitation is the royalty, most commonly characterized as the payment due to the sovereign owner in exchange for the right to extract the mineral substance. To the best of our knowledge, this book is the only comprehensive treatment of both the theoretical underpinnings and practical application of royalties and their relation to the overall taxation regime. It is a topic of great interest to the countries where the World Bank is working
with governments to try to encourage new investment in mining while
simultaneously ensuring that adequate and fair taxation is practiced.
This book provides a general discussion of the concepts behind mining
taxation, a “nuts and bolts” guide to royalties, examples of royalty
calculations and the ways in which these interact with other forms of
taxation, as well as financial effects on investments under varying conditions.
The book discusses implications for investors and governments of
various tax regimes and provides specific country case examples..."
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Latin America
The following observations have been made on royalty
systems in Latin American countries:
1. Two of the most important mineral-producing nations in the region,
Chile and Mexico, do not impose royalties, and in Argentina, some
provinces do not.
2. Nations imposing royalties rely mainly on ad valorem–based systems, have “reasonable” rates, and tend to distribute them to mandated parties instead of adding them into the central treasury.
Table 3.7. Summary of Royalty Practices in Selected Latin American Countries
(country/royalty rate - extracted)
Argentina = 0–3%
Bolivia = 1–6% based on sales price position relative to reference
price bands.
Brazil = 0.2–3.0%
Chile = n.a.
Dominican Republic = 5% of FOB export
Mexico = n.a.
Peru = 0–3% (exported mineral 1–3%; if no international price 1%;
small scale 0%)
Venezuela,R.B. de = 3–4%
©2006 The International Bank for Reconstruction and Development / The World Bank