The Chilean government has moved to have mining companies pay a new tax to finance a national innovation growth fund beginning in 2007.
Depending upon operating margins, each company would be charged a factor of 0-3% of net sales.
This measure will allow the state to collect close to US$100mn a year, which will be placed into a scientific and technological innovation fund.
This charge will come into effect in 2007, when new projects will have depreciated. Also, this charge will apply to all mining businesses, not just those involved in copper, and it is not a retroactive measure.
Since it is not retroactive, the measure will not affect existing mining operations.
The proposal does not affect the DL600 decree which regulates foreign investment in Chile.
The charge will be applied to companies whose operating margins are higher than 5%. The higher the company’s operating margin, the higher the factor used to charge the company.
The bill would need the approval of four-sevenths of members of both houses of congress as it would involve modifying Chile’s constitutional framework.