Mining Industry is in danger – Part-5

The Corporate Income Tax rates in India are very high compared to the other major mining countries. The effective tax rate is around 34.61% for income exceeding Rs. 100 million for the domestic company and for the foreign company the rate is 43.26% (KPMG, 2015). A minimum alternative tax (MAT) is levied at 18.5% of the adjusted profit of the companies where the tax payable is less than 18.5% of their book value.  The government has also started charging “carbon tax” which would add to the percentage furthermore.

Mining sector is capital intensive and utilizes specialised mine equipment that is usually imported.  Higher import duty on mine equipment has a direct negative impact on mine projects, especially in the initial years of the mine project.  Even the royalty rates in India are at the highest level. The rate of royalties on iron ore is 15% and that on coal is 14% which is way more than the other countries of the world .

       International Comparison of Corporate Tax Rates: 2015

 Country Corporate Tax Rate
Argentina 35%
Australia 30%
Brazil 34%
Canada 26.5%
Chile 22.5%
China 25%
Germany 29.65%
India 34.61%
Indonesia 25%
Mexico 30%
Peru 30%
Philippines 30%
Russia 20%
South Africa 28%
Tanzania 30%
Ukraine 18%
United Kingdom 23%
United States 40%

 

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