Chile Finance Minister Mario Marcel

The Chilean government has presented a new tax reform that considers a tax increase focused mainly on large copper miners. The reform involves a combination of taxes on sales and the production margin.

“What we are proposing here is for mining companies with production rates over 50,000 metric tons (mt) of fine copper per year,” Minister of Finance Mario Marcel said. “A combination of àd valorem rates and a rate on the production margin that increase according to the price of copper is applied to them.”

Marcel said the current regime will be maintained for the rest of the mining companies.

“This is going to mean an increase in royalty collection, an increase in the state’s participation in mining income, but seeking to ensure that mining activity has sufficient returns to encourage investment,” he added.

The treasury said the tax will be divided into two components. The first is ad valorem, which will range between rates of 1% and 2% for miners producing between 50,000 mt and 200,000 mt of fine copper. For miners that produce more than 200,000 mt, the rate will be between 1% and 4%.

The next component will be based off return and rates will be between 2% and 32%. In both cases, rates are established while considering the price of copper.