Chile Introduces Bill to Increase Copper Mining Tax

Chilean finance minister Marcel introduced a tax reform bill that would increase copper mining royalties on companies that produce more than 50,000 tonnes a year, and raises taxes on bigger producers to fund the government’s proposed social programs and reforms.

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

Marcel argued that this bill would help the government but not against the companies. He said they would ensure the mining sector has enough income to encourage investment.

A treasury department press release reveals the plan has two components: One is an ad valorem tax between 1% and 2% for companies that produce between 50,000 and 200,000 tonnes of fine copper a year and a rate between 1% and 4% for those that produce more than 200,000. The second is a rate between 2% and 32% on profits for copper prices between $2 and $5. Both components vary based on the price of copper.

Smaller copper producers will continue with the current system, Marcel added.

The proposed bill aims to collect 4.1% of GDP over four year, with 0.7% going to a new guaranteed pension fund.

The proposal also raises taxes on high-income earners, capital gains and introduces a new wealth tax for citizens with more than $5 million in assets.

Marcel stressed that Chile’s tax collection rate of 20.7% of GDP is below the OECD median of 34.7%.

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