Chilean legislators voted Tuesday (Aug.20) to call on the government to set up a special commission to look into introducing royalties on mineral production. The vote, in the chamber of deputies or lower house, was 48 in favor and 32 against, a congressional official told BNamericas.
The motion, which does not need to go before the senate, also asks the commission to analyze changes to the tax regime to ensure that companies do not use mechanisms such as accelerated depreciation to avoid paying income tax, and to look into alleged monopolistic practices among miners.
The measure was sponsored by a group of 10 deputies from across the political spectrum, led by the chairman of the chamber's mining committee, Carlos Vilches.
The commission would consider how to apply royalties, such as whether they would be charged according to the amount or value of the mineral extracted, or on profits. Private sector representatives complain that more taxes would involve changing the rules of the game for investors.
Foreign-owned mining companies, notably copper producer Disputada de Las Condes, have come in for criticism from some politicians for supposedly using accounting methods to avoid posting profits and therefore not paying income tax.
Disputada, which is in the process of being sold by US oil giant ExxonMobil (NYSE: XOM) to London-based Anglo American (LSE: AAL) for US$1.3bn, denied the allegations and says it has not paid income tax because hefty investments have meant it has built up losses since being acquired from state-owned Enami in 1978.
Chile is the world's largest copper producer, accounting for over 30% of global output.
By David Roberts
BNamericas.com
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