Mining companies propose to extend instant depreciation to 4 years and criticize Tax Reform
The Sonami and the Mining Council expressed their concern that Chile could be losing competitiveness against other countries, considering the higher energy costs and higher taxes.
A strong call to not change the DL 600 that protects foreign investment, to maintain the competitiveness of Chile in mining, made the main sector unions before the Senate Finance Committee. The main concern expressed by the representatives of the National Mining Society (Sonami) and the Mining Council was the disadvantage that would add the country to attract capital in circumstances that Peru, one of its main competitors in the area, remains immutable rules by 15 years. “Removal of DL 600 does not contribute a single penny to the increased collection of tax reform and only creates uncertainty,” said the president of the Sonami, Alberto Salas.
He stressed that the 1974 decree law is not related to the spirit of the project, which is optional to the state. It was suggested that the government does not apply to the entry of foreign investment and evaluate what happens first; or wait until the Ministries of Economy and Mining define new parameters to attract capital.
“The DL 600 is a basic tool, widely used, we see no reasonable, solid argument for repeal. While there is redefined, it does not seem logical to us to leave it in the air, “he said, meanwhile, Joaquín Villarino, CEO of the Mining Council.
Both leaders recalled that in 2009 Chile stood at seventh mining competitiveness according to the Fraser Institute of Canada, and in 2014 had dropped to number 30. Commented that not only have they raised cathode production costs, but also has down the ore, which adds to the legislative uncertainty. “In eight years has twice changed the royalty; once the additional global tax, and that in the long-term investment is called instability”, Villarino said.
To the fore came the case of Peru which maintains a corporate disintegrated tax of 30%, plus one additional to partners of 2%, with 15 years invariability.
“If there is no lower energy costs, there is no access to water, no environmental institutions making progress in the projects; if you have any of these certainties, Chile cannot afford to raise taxes to 35%. If further eliminates the DL 600, is creating a not very favorable situation, “said Villarino before the worried look of senators.
Instant Depreciation and helps communities
The unions also expressed concern about the investment before the end of FUT (Taxable Income Fund). The Sonami and Mining Council suggested that the compensatory mechanism proposed in the draft, instant depreciation for one year, be postponed until 2017 when the FUT is removed and spread over four years.
Another issue that occupied his attention was the project proposal which eliminates the possibility to deduct as an expense the contribution that companies make in communities. This standard was approved in the last tax reform during the administration of Sebastián Piñera.
Source: Pulso
