Mart Resources Inc MAUXF

Question about tax benefit contributions

[Fernando2010]

From 2012 Financial statements (note 22):

"For the year ended December 31, 2012 the Company recorded $10.6 million of tax benefit contributions. This represents the Company’s costs relating to the tax incentives granted to Mart’s co-venturers with respect to the petroleum operation at the Umusadege field. The payment of the tax benefit contributions will cease upon the expiry of the tax incentives period in 2014. There were no equivalent charges in 2011."

Is there any reasonable explanation for this item? It doesn´t seem a legal obligation, but rather a payment generated as a result of some kind of agreement with our local partners regarding the tax incentives. It looks like Mart is obligated to pay to their partners the difference between the tax rate absent any incentive (65%) and the tax rate as a result of that incentive (30%). But I´m not sure on this.

Any comments?

Thanks in advance

Fernando

[zeus55]

Fernando, check inbox

[zeus55]

Well Fernando, 155 people read your question, and not one of the "experts" even tried to respond. That sure says a lot about those who love to post their rubbish here. But I hope you found my inbox helpful.

[elaine0356]

A very good piece of information: https://www.investorvillage.com/smbd.asp?mb=12706&mn=6567&pt=msg&mid=13072634

[zeus55]

A very messy bit on the tax pools, and far too many assumptions to be really useful. We know they have some writeoffs to offset some of the tax burden, but the question is; will it be enough to offset the much higher petroleum profits taxes coming in a few months? Only the company knows for sure, and they aren't sharing that info. And not one person has ventured any thoughts on the '

[stockpeeker]

This doesn't answer your question directly regarding tax rate, etc., but there is an interesting discussion on InvestorVillage (nice, clean, low-spam environment for discussion). There are two boards where Mart is discussed. The first is the Mart discussion board: https://www.investorvillage.com/smbd.asp?mb=12706&pt=m The topic of taxes (within the context of dividend increase) began

[wallywill]

Reference to the tax benefit contibutions. Fernando what you are refering to is the pioneer status that was granted to Mart back in 2011. This gave the company a "tax holiday" on the petroleum profits which expires in 2014. (this is separate from income taxes which Mart still pays).  I suspect that this was brought up on the board to try and create doubt about future costs to Mart

[wallywill]

Sorry there is a typo mistake in my previous post. It was 2012 Mart recorded a 10.6 million tax benefit. Regards Wally