MINE TAXATION

Name:- Yasir Rahman

Reg No:- 200301190005
Branch:- B.Tech Mining (7th sem)
Contents
Introduction

Taxes play an important role in the financing and in the day-to-day operations of mining
companies. Knowledge of taxation concepts and tax rules generally applicable to mining is
useful in understanding the key area of finance within the industry.) At times, taxes imposed
may significantly influence the viability and/or economic attractiveness of a given mining
project. This chapter reviews the gamut of mining taxation, and addresses the pertinent issues.
The objective of this chapter is first to provide an overview of the conceptual framework of tax
systems, and then to understand some of the more commonly found aspects of taxation unique
to the mining.
Objectives Of Taxation

The basic objective of taxation is to raise resources for the state. Different objectives of
taxation may be summed up as follows:-
1. Objective of raising revenue.
2. Regulatory objective.
3. Regulatory consumption.
4. Regulatory production.
5. Regulating imports and exports.
6. Developmental objectives.
Optimum Tax level

If tax rate is high, arguably a greater share of the wealth created through mining goes to the
government. But that also means the investor gets lesser share of the economic surplus, and
may thus, be less motivated towards investing in mining ventures; particularly so when early
high-risk cycles of prospecting, exploration and development are involved. Also, mining of
low grade ores will take a beating. At times, the tax shock imposed through sudden jump in tax
rates may render some of the operating mines unprofitable, and may lead to their premature
abandonmen
 According to Tilton(2004) an optimum level of taxation minimizes the NPV.
Principles OF Mine Taxation

The principles are:-

1. Adequacy
2. Board Basing
3. Compatibility
4. Earmarking
5. Efficiency
6. Equity