Mongolia mining tax reform hits committee hitch
miningweekly.com
By: Reuters
21st August 2009
ULAN BATOR - A Mongolian parliamentary committee has slowed the progress of a reform which would pave the way for billions of dollars of foreign investment, after one member voted against sending it to a plenary session.
The reform, which needs approval by a vote in parliament, would abolish a 68 percent windfall profits tax and restructure the tax treatment of Oyu Tolgoi, a copper and gold project that Ivanhoe Mines Ltd and its partner Rio Tinto have been waiting to start for years.
The tax was brought in hurriedly in 2006 to allow the state to benefit from historically high copper and gold prices, but instead set the stage for acrimonious negotiations with Ivanhoe.
Ivanhoe, Rio and the Mongolian government earlier this month reached a draft agreement that requires changes to the legal framework for foreign investment.
But one of the 12 members of parliament's budget committee, N. Batbayar, who originally framed the windfall profits tax, voted against advancing the debate on revoking the tax, which meant parliament could not pass the measure in one reading.
An open parliamentary session on Friday voted 54 to 10 to send the draft law on revoking the tax back to the committee stage on Monday. The committees can then decide to send them back to the plenary session of parliament.
Under the current proposal, the windfall profits tax would be abolished effective Jan. 1, 2011.
Edited by: Reuters |
