What is the mining royalty? Four important pieces of information to understand how it benefits regions throughout Chile
The initiative seeks to raise resources to benefit more than 300 municipalities in the country.
The mining royalty is a government initiative to modify the taxes paid by large companies from the sector. It establishes the distribution of resources worth US$450 million to regional governments and municipalities throughout Chile.
Below, you can review key pieces of information about the large-scale mining royalty and what its benefits will be for regions throughout the country.
The large-scale mining royalty is a fair and efficient tax collection mechanism
The mining royalty is a very common global method that consists of a specific tax for large-scale companies from the sector, in consideration of the fact that they exploit scarce and non-renewable natural resources.
This mechanism seeks to generate fair and efficient tax collection in order to increase resources for Chile’s different regions and promote the development of the economy.
The mining royalty promotes a better quality of life for families in Chile
Through the large-scale mining royalty, the Government of Chile wants the resources generated by large-scale mining to be significantly returned to the places of origin.
Investment, development and a better quality of life will thus be promoted for families in more than 300 of Chile’s municipalities.
Mining royalty: resources for Chile’s regions
The injection of resources to Chile’s regions thanks to the large-scale mining royalty is a path towards development that will allow us to make progress in fiscal decentralization and territorial justice.
The initiative modifies the taxes paid by large companies from the sector. It establishes the distribution of resources worth US$450 million to regional governments and municipalities throughout Chile.
How does the large-scale mining royalty work?
The large-scale mining royalty bill seeks to modify the taxes paid by large companies by establishing a maximum potential tax burden.
The maximum potential tax burden establishes a ceiling that the large mining companies will pay in taxes. It jointly considers payment of the specific tax or royalty, the first category tax and final additional taxes.
This means that if the sum of these taxes exceeds said limit, the royalty will be adjusted until it reaches the maximum percentage established by law.
The bill establishes a maximum potential tax burden differentiated according to the level of production of each large mining company.
The maximum potential tax burden differentiated according to the level of production is:
- Companies that produce more than 80,000 metric tons of fine copper: 46.5% on the adjusted mining operational taxable income (RIOMA)
- Companies that produce between 50,000 and 80,000 metric tons of fine copper: 45.5% on the adjusted mining operational taxable income (RIOMA)