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Part B: Mineral Rights - Part B-6: Beneficiation - Processing, Trade & Transport - 35. Beneficiation – Processing, Trade and Transport - 35.13 Incentives for Processing, Trade and Transportation of Development Minerals | 35.13(b) Reduced Income Tax

This section outlines measures designed to apply a reduced income tax with respect to holders of licences as Authorised Processing Facilities, Authorised Trader/Dealers and Authorised Transporters of development minerals. It is intended that the reduced income tax should apply only to citizens of the country where the development minerals are being mined in order to grow the local entrepreneurial class.

Reduced income tax may or may not be appropriate in a given jurisdiction. In jurisdictions where the tax rates are progressive and increase as income levels increase, the tax rate may already be sufficiently modest to permit the development of a low-margin development minerals beneficiation subsector of the minerals sector by local entrepreneurs. On the other hand, if the country’s tax rates are uniform across income levels.

A reduction in the income tax rates may be appropriate in order to stimulate investment in the development minerals beneficiation subsector.

35.13(b) Example:

Article [_]

(1) Individuals who are holders of Authorised Processing Facility licences and are citizens of [Country] shall be entitled to a [ %] reduction in the rate of income tax payable on their net income from activities under their licence, in accordance with the applicable tax law.

(2) Entities formed under the laws of [Country] who are holders of Authorised Processing Facility licences shall be entitled to a [ %] reduction in the rate of income tax payable on their net income from activities under their licence, in accordance with the applicable tax law.

Article [_]

(1) Individuals who are holders of Authorised Trader/Dealer or Transporter licences and are citizens of [Country] shall be entitled to a [ %] reduction in the rate of income tax payable on their net income from activities under their licence, in accordance with the applicable tax law.

(2) Entities formed under the laws of [Country] who are holders of Authorised Trader/Dealer or Transporter licences shall be entitled to a [ %] reduction in the rate of income tax payable on their net income from activities under their licence, in accordance with the applicable tax law.

Annotation

The example provides for a percentage reduction in the otherwise applicable income tax rate for the holders of Authorised Processing Facility, Authorised Trader/Dealer and Authorised Transporter licences. The actual percentage reduction is not specified. It will depend on the tax structure of each jurisdiction and the extent to which an income tax reduction is necessary in order to spur development of the subsector.

The example assumes that Authorised Processing Facility licence holders will be treated differently than the holders of Authorised Trader/Dealer and Authorised Transporter licences. The former will probably be granted a greater reduction than the latter because of the relative capital intensity of minerals processing.

The example also recognizes that individual licence holders and corporate licence holders will be subject to different tax structures. Consequently, there may be a justification for granting them separate reductions, respectively.