National Chilean private sector mining society Sonami has raised concerns about the government’s proposed abolition of DL 600 tax provisions, which it claims could discourage global mining companies from investing in the country.
Under the DL 600 tax provision, firms with projects worth more than $50m can sign a foreign investment contract with the government and investors can be offered a fixed corporate income tax rate for ten years.
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As part of its tax reform initiative, the Chilean Government has called DL 600 to be removed and to raise about $8.2bn a year for new government programmes.
Sonami president Alberto Salas was quoted by bnameircas as saying that foreign mining companies have invested around $50bn in the country in the last 30 years under the DL 600 tax provision, which provides stability to carry out business.
"Imposing the same rules, under the same conditions, on foreign as on local investors does not go against the spirit of the tax reform, which is to raise more funds," Salas said.
Speaking at the Expomin trade show in Santiago in April, Salas also stated that the tax reform would affect the abolition of the FUT tax credit mechanism in 2018, which would force company owners to pay the full rate of personal income tax on deferred dividends and not enjoy the current tax credit.
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By GlobalDataSalas said that the abolition of FUT tax credit would affect savings and investment, but acknowledged that they are open to perfecting it with the aim of adhering as closely as possible to the spirit of the law which of incentivises savings.
The tax reform would also affect the presumptive tax income used by small miners, as state mining companies buytheir output and look after the collection of taxes.
Chile estimates that investment in the mining sector will rise to $112bn by 2021, including a proposed $27bn investment by Codelco.
Copper accounts for 60% of Chile’s exports and by 2021, the country aims to produce 8.1 million tonnes of copper.
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