Por James Attwood and Valentina Fuentes
A Chilean bill to raise taxes on the mining industry took a key step forward Tuesday with the Senate’s finance committee provisionally approving a new cap on the effective tax rate, one of the proposal’s most controversial issues.
The committee agreed to put the cap for large copper producers at 46.5% of operating profit, down from the 47% previously proposed. The committee is set to formally approve the new cap this afternoon. The bill will next go to the floor of the Senate, before heading back to the Lower House for a final vote.
The new cap translates into an average effective rate of about 45%, according to consulting firm Plusmining. Chile’s major competitors have a tax burden of 41% to 44%. The tax ceiling for units of giant mining companies including BHP Group and Anglo American Plc has been the focus of debate for months as the left-leaning government attempts to increase its take of copper earnings, without undermining Chile’s competitiveness. At stake are tens of billions of dollars in expansion projects.
Late Monday, Finance Minister Mario Marcel said he’d reached an agreement with opposition lawmakers on the new tax ceiling. The government agreed to amend the bill after a series of electoral and legislative defeats.
Over the weekend, opposition groups secured more than the three-fifths majority needed to push through articles at will in a council charged with drafting a new constitution. That followed defeats of a previous constitutional rewrite and a broad tax reform proposal.