SANTIAGO - Chile's lower house of congress approved a royalty proposal bill that introduces a 5% tax on operating profits of mining companies, the chamber reported on its website on March 23. The bill was approved by 84 votes in favor, 14 against and eight abstentions.
The proposal would establish a levy on all mining companies whose annual sales are over US$5 million unless their operating margins are less than 8%. The measure also establishes the option of a 15-year tax stability regime for mining operations bringing in foreign investment of US$50 million or more.
The proposed legislation, dubbed Royalty II after a previous attempt failed to make its way through the congress, now goes to the senate for a further reading and vote. The bill is a government response to accusations that mining companies have not been contributing enough to fiscal coffers and that some use "creative accountancy" methods to avoid posting net profits and therefore paying regular income tax.
The government hopes to have the law in place by the end of this year.