Chile plans to raise copper mining royalties and reform tax system

SANTIAGO (Reuters) -Chile’s finance minister, Mario Marcel, on Friday launched a tax reform invoice that will increase copper mining royalties on corporations that produce greater than 50,000 tonnes a 12 months and raises taxes on high-income earners to fund the federal government’s proposed social applications and reforms.

Chile is the world’s prime copper producer and is dwelling to world copper giants like Codelco, BHP, Anglo American Glencore and Antofagasta.

“This implies a rise in income from royalties, a rise in state participation in mining earnings,” Marcel stated. “But additionally making certain the mining sector has sufficient earnings to encourage funding.”

A press launch from the treasury division says the plan has two parts. One is an advert valorem tax between 1% and a couple of% for corporations that produce between 50,000 and 200,000 tonnes of positive copper a 12 months and a charge between 1% and 4% for people who produce greater than 200,000.

The opposite part is a charge between 2% and 32% on earnings for copper costs between $2 and $5. Each parts range primarily based on the worth of copper.

Smaller copper producers will proceed with the present system, Marcel added.

The invoice goals to boost 4.1% of GDP over 4 years, with 0.7% going to a brand new assured minimal pension fund.

The proposal additionally raises taxes on high-income earners, capital features and introduces a brand new wealth tax for residents with greater than $5 million in belongings.

Marcel famous Chile, with a tax assortment charge of 20.7% of GDP, is under the OECD median of 34.7%.

“Traditionally, few international locations have reached financial prosperity with a low tax load,” Marcel stated, including that 97 p.c of taxpayers will not be affected by the proposal.

The invoice additionally tries to cut back tax exemption and evasion whereas giving tax breaks for hire and care for kids below 2 and the severely dependent.

(Reporting by Natalia Ramos and Alexander VillegasEditing by David Goodman)