In August, the Ministry of Finance issued a regulation reducing
the export tax payable on raw ore exports, provided there is
evidence that the company has committed to build a smelter. The
effect of the new regulation is that the more advanced the
development of the smelter, the less export tax will be
There are three phases of development:
for providing a "seriousness guarantee" with smelter
development of up to 7.5%, the export tax is set at 7.5%;
for smelter development of between 7.5% and 30%, the export tax
is 5%; and
for smelter development exceeding 30%, no export tax is
Tax treatment for smelter companies
The original proposal was for a blanket ban on raw ore exports.
In a last-minute "compromise" in January 2014, export of
certain concentrates with a minimum purity of 15% was permitted to
continue if a substantial export tax was paid. The export tax was
set at 20%-25% for 2014, progressively increasing to 60% by July
2016, irrespective of whether a company planned to build a
The large export tax will continue to apply to companies that
have not committed to building a smelter.
Copper, iron, manganese, lead, zinc, ilminite and titanium
concentrates may be exported with the benefit of the export
tax-based exemptions included in the original
"compromise" that we reported in May, while there are
still no export tax-based exemptions for nickel, bauxite, tin,
gold, silver or chronium.
We mentioned in May that the Government had proposed limited
relief for foreign shareholders from divestment obligations where
the company holds a mining permit and operates a smelter, and no
divestment requirements are available for foreign shareholders that
operate a smelter only. At this point, the proposed divestment
relief has not yet been included in a new regulation.
We will issue further updates as this issue moves forward.
To print this article, all you need is to be registered on Mondaq.com.
Click to Login as an existing user or Register so you can print this article.
The TPP could have a significant positive impact on the investment and financial services of Australia and Singapore.
Some comments from our readers… “The articles are extremely timely and highly applicable” “I often find critical information not available elsewhere” “As in-house counsel, Mondaq’s service is of great value”
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).