MINISTER S.BAYARTSOGT: ₮80 BILLION BUDGET REVENUE WILL BE COLLECTED THROUGH THE NEW SLIDING SCALE OF ROYALTIES
Minister S.Bayartsogt shares his opinion on Windfall Tax, to be replaced by the new sliding scale of royalties on January 2011.
The Ministry of Finance made a detailed research on replacement of windfall tax. There are many taxes which apply when the price surges in the world. But we are about to propose the draft law after carefully selecting new sliding scale of royalties, which is one of the most widely accepted and understandable arrangements. According to the Mineral Law, 5% of royalty will be imposed on sales income.
Now additional 5% of royalty will be imposed on all mineral types. It has 5 scales. Royalty will be increased 1-5% according to the price surge. Sliding scale royalty varies from mineral to mineral. For example, as for copper concentrate, 5% royalty fee will be calculated when copper price will be up to $5000 per ton, 6% per $6000, 7% per $7000, 8% per $8000, 8% per $8000, 9% per $9000 and 10% if exceeds $10000 per ton. As for gold commodity, 5% of royalty fee will be imposed for ounce gold reaches up to $900, 6% for $1000, and 10% for over $1300.
Minister S.Bayartsogt continued that draft law initiators received comments from related organizations. Most of them support the draft. But as for the scaling co-efficiency the National Mining Association suggest 0.5% scaling steps instead of 1%. If compares today’s average price with the average of last 5 years, we can impose 7-8% sliding scale royalty for all types of mineral. With this arrangement, revenue of ₮80 billion will be collected to the budget.
Q: Is this effective for Oyu Tolgoi?
Minister S.Bayartsogt: Oyu Tolgoi IA stabilizes tax environment, therefore, it will not affect the project.
Q: When the budget modification will be proposed?
Minister S.Bayartsogt: On Thursday, April 29. Three sides negotiation agreed to increase the salary by 30% in October. It will be added in the budget modification.