Mine

Taxation

Rini Novrianti Sutardjo Tui

Competitive Taxation: Company

Responsive towards profit achievement

Puts fluctuation of profit into consideration

Stable, predictable, and transparent

Facilitates efficiency

Low rate in the beginning of production phase

Competitive Taxation: Government

Anticipates the times

Simple,
Supports stability of when company earns
administratively easy,
macroeconomics large profit or has small
hard to ignore
costs

Takes present value

Neutral and efficient
into account
Characteristic of Taxation System

Characteristics
Neutrality
Efficiency

Stability Taxation System

Equality

Clarity
Elements in Quoting Taxes

Objectives of
quoting

Quoting
governance
Basis of quoting

Quoting rate
Types of Mine Taxes

• Royalty
• Free equity
Economic Rents
• Up-front bonus payments
• Windfall profit

• Access of land
• Dead-rent
User-pay Taxes
• Payroll taxes
• Property taxes

• Income taxes
Corporate Citizenship
• Added value and selling taxes
Taxes
• Customs
Mine Royalties

Advantages Disadvantages

Follows volume of Insensitive towards

production change in price

Provides stable Regressive, not

income for based on ability to
government pay

Easy to be Not comply concept

calculated, quoted, of neutrality and
and controlled efficiency
Mine Royalties

Royalties

Unit-based Value-based Profit-based

Based on volume or
Based on selling value Based on net
tonnage of exploitated
of reserve operational profit
reserve
Mining Characteristics and Taxation

High risk business Limited mining lifetime

Reclamation and closing

Intensive capital
mine

Price taker Remote location

Fluctuated price State ownership

M i n e I n v e s t m e n t A n a l y s i s