NZ government to tweak tax and royalty regimes for miners
Oct. 31 (BusinessDesk) - The government is moving to tweak tax and royalty regimes in a bid to increase the revenue it
collects from the resources sector having signalled plans to facilitate mining.
The government is seeking submissions by Dec. 7 on a review of royalties paid by miners, excluding oil and gas
companies, and a separate tax paper that excludes oil and gas and coal. New mineral mines will have to pay higher
royalties and tax concessions for miners are being removed.
The government says the current tax regime for miners is concessionary and should be comparable to other industries so
there is no bias in investment decisions.
The tax moves come after the government outlined a review of mining legislation in March as it seeks to encourage mining
of a wider range of minerals in new areas to drive economic growth.
The Crown wants to receive a "fair financial return" from tax and royalties as minerals are mined, according to the
documents released on Wednesday.
The tax review suggests removing immediate tax deductions, or in some cases tax deductions in advance, for expenditure
that would normally be capitalised and depreciated over the useful life of the asset.
The royalties review recommends higher royalty rates for large and highly profitable mines. New rates only apply to new
permits.
New Zealanders know that the royalties and taxes from mining companies pay for hospitals, school and roads, Energy and
Resources Minister Phil Heatley says.
"There is real potential for that contribution to grow," he said.
The Reviewing the Royalties Regime for Minerals paper focuses on the royalty rates applied to coal, gold, silver,
platinum group elements, ironsands, phosphates and seafloor massive sulphides (SMS).
A hybrid royalty of the higher of a 2 percent ad-valorem (AVR) or a 10 percent accounting profit (APR) royalty will
apply to new coal, golf, silver, platinum, ironsands, phosphates and SMS permits.
Coal miners can make an annual accounting profit of $5 million before the 10 percent APR royalty would apply and for
gold the figure is $2 million.
An existing threshold of $200,000 of annual net sales is retained before permit holders are liable to pay a royalty.
New underground coal gasification projects pay the higher of a 1 percent AVR or a 10 percent APR.
Currently gold, silver and platinum miners pay an AVR royalty of between 1 percent and 2 percent, depending on the size
and coal miners pay a unit based royalty of $1.40 per tonne for hard and semi-hard coking coal and 80 cents a tonne for
thermal and semi-soft coking coal.
(BusinessDesk)