This site uses cookies. By continuing to browse the site you are agreeing to our use of cookies. Find out more here.  
 

Minerals Council Warns Against Australian Resource Tax Grab

Thursday, February 18, 2010

In its 2010-11 pre-budget submission, the Minerals Council of Australia (MCA) looks for tax reform proposals that enhance the competitiveness of Australian industry, and is particularly concerned at the prospect of a “tax grab” against Australia’s minerals sector.

The MCA’s chief executive officer, Mitchell Hooke, said: “On tax reform, the industry is looking to work closely with the government as it considers its response to the Henry review. The MCA considers the best way to progress tax reform is to base the Government’s initial response to recommendations on any new national minerals royalty regime on high-level principles and a clear commitment to consult with relevant stakeholders, especially industry and state governments.”

“The minerals industry is not a milch cow for repairing the Budget or for other policy objectives such as reforms to state and company taxes or the social security tax interface,” he added.

The MCA confirmed that the mining industry already makes a significant contribution to tax receipts in Australia, with total taxes paid by companies and individuals estimated at around AUD21bn (USD18.8bn) in 2008-09 – more than double the amount in 2005-06.

In its submission to the Henry review, the MCA indicated general support for a shift towards a profit-based regime, though this support was heavily qualified and conditional upon getting the design of any future regime correct. “Poorly designed reforms,” it now says, “which compromise predictability, neutrality and efficiency would undermine Australia’s international competitiveness, increase its sovereign risk and jeopardize investment and business growth to the detriment of the industry and the nation.”

“The imposition of a cash flow tax, like Australia’s Petroleum Resource Rent Tax (PRRT), on the minerals sector would be unprecedented and the MCA has never indicated support for the 'simple' transposition of a PRRT onto the minerals sector,” the submission continues. “Any proposal that mining should be taxed at the same rate as oil and gas would represent a significant tax increase that would make Australian mining operations among the most highly taxed in the world and seriously damage the competitiveness of Australian projects.”

The MCA believes that changes in taxation and royalties must not undermine the basis upon which long-run investment decisions have been made. Any changes should apply only to prospective investments, not to investments that have already been made.

In addition, the overall taxation burden (local, state and federal taxes and levies) should be “internationally benchmarked and be competitive against other global investment destinations, recognizing the mobility of capital (financial, human and technological) and that Australia competes for foreign direct investment in a highly integrated global industry.”

It also emphasizes that “capital investment and financial return characteristics differ across resources commodities, starkly between oil and gas, but also significantly between minerals commodities. Achieving a competitive taxation and royalty regime for different resources products requires different designs and taxation/royalty rates specific to the characteristics of each resources product group.”

The MCA also considers that the government’s proposed climate change measures would impose new costs on Australia’s trade exposed industries, ahead of other major emitters and trading partners. It opposes the government’s carbon pollution reduction scheme (CPRS) in its current form, saying that it “would cost thousands of jobs and billions of dollars of investment in regional and remote Australia, while failing to materially reduce global greenhouse gas emissions or deliver one cent to new low emissions technologies.”

In opposing the CPRS legislative package, the MCA advocates a better alternative based on a phased approach to the auctioning of permits. The failure of the Copenhagen meetings implies that substantial additional global action is needed before Australia adopts policy measures that impose new costs on trade exposed industries.

It is of the opinion that there will be no global solution to climate change without the development of low emissions clean coal technologies. “The Government,” it states, “has taken important steps to support the development and commercial deployment of low emissions coal technologies. This support must continue and complement the Australian coal industry’s AUD1bn investment in this technology.”

Finally, the MCA also attacks the government’s proposed new research and development (R&D) tax credit system which, it says, would reduce incentives for mining innovation in Australia. “The draft legislation narrows definitions and introduces complex and prescriptive rules that will limit eligible claims for new tax credits in large R&D projects. The proposed changes run counter to the government’s stated of intention of boosting innovation in Australia.”

It adds that, as “the result will be a more complicated program with higher compliance burdens and reduced incentives for innovation activity, especially at the critical planning stage of projects,” the MCA will be urging that the government makes significant changes.

Mailing List

Click here to manage your mailing list preferences, or view our privacy statement.


The Report

Offshore Trusts Guide: Introduction

The History of Offshore Trusts
Development of Professional Competence in the Jurisdictions
What Future for the Trust?
The New Age of Transparency
The Swiss Association of Trust Companies
The Society of Trusts and Estates Practitioners

Offshore Trusts Guide: Jurisdictions

Bahamas

Bahamas: Legal Framework and Formation Rules and Fees
Bahamas: 2006 Private Trust Companies Legislation

Barbados

Barbados: Legal Framework and Formation Rules and Fees
Barbados: Supervisory and Licensing Regime and Fees

Bermuda

Bermuda: Legal Framework and Formation Rules and Fees
Bermuda: Supervisory and Licensing Regime and Fees

British Virgin Islands

British Virgin Islands: Legal Framework and Formation Rules and Fees
British Virgin Islands: Special Trusts Act 2003
British Virgin Islands: The Trustee Act 2003
British Virgin Islands: :Supervisory and Licensing Regime and Fees
British Virgin Islands: New Laws on Private Trust Companies
British Virgin Islands: New Private Trust Company Regulations

Cayman Islands

Cayman Islands: Legal Framework and Formation Rules and Fees
Cayman Islands: Supervisory and Licensing Regime and Fees

Cook Islands

Cook Islands: Legal Framework and Formation Rules and Fees
Cook Islands: Supervisory and Licensing Regime and Fees

Cyprus

Cyprus: Legal Framework and Formation Rules and Fees
Cyprus: Supervision, Licensing and Tax

Gibraltar

Gibraltar: Legal Framework and Formation Rules and Fees
Gibraltar: Legislation, Regulation and Supervision

Guernsey

Guernsey: Legal Framework and Formation Rules and Fees
Guernsey: Trusts Law 2007

Isle of Man

Isle of Man: Legal Framework and Formation Rules and Fees
Isle of Man: Supervisory and Licensing Regime
Isle of Man: Uses Clients and Tax Treatment

Jersey

Jersey: Legal Framework and Formation Rules and Fees
Jersey: Supervisory and Licensing Regime
Jersey: Trusts Amendment Act 2006
Jersey: Foundations

Liechtenstein

Liechtenstein: Legal Framework and Formation Rules and Fees
Liechtenstein: Regulation Supervision and Transparency
Liechtenstein: Characteristics of Liechtenstein Trusts
Liechtenstein: Foundations

Madeira

Madeira: Legal Framework and Formation Rules and Fees

Malta

Malta: Legal Framework and Formation Rules and Fees
Malta: The Trust and Trustees Act 2004

Mauritius

Mauritius: Legal Framework and Formation Rules and Fees
Mauritius: Characteristics of the 2001 Trusts Act
Mauritius: Additional Provisions of the 2001 Trusts Act
Mauritius: Tax Treatment

Monaco

Monaco: Legal Framework and Formation Rules and Fees

Nevis

Nevis: Legal Framework and Formation Rules and Fees

Panama

Panama: Legal Framework and Formation Rules and Fees
Panama: Requirements for Acting as Trust Company in Panama

Seychelles

Seychelles: Legal Framework and Formation Rules and Fees

Turks & Caicos

Turks & Caicos: Legal Framework and Formation Rules and Fees
Turks & Caicos: The Voidable Dispositions Ordinance

Vanuatu

Vanuatu Legal Framework and Formation Rules and Fees




Latest News

Jersey Proposes Infrastructure Levy
23/6/2017
Jersey is consulting on the introduction of a land development charge, to be called the Jersey Infrastructure Levy.

ADGM Establishes REIT Regime
20/6/2017
Abu Dhabi Global Market, the low-tax international financial center, has introduced a private real estate investment trusts regime.

Jersey Research Highlights China HNW Succession Issues
15/6/2017
Jersey's financial services promotion agency, Jersey Finance, has published new research on the key challenges facing wealth management practitioners working with China's wealthiest individuals.

NZ Foreign Trust Numbers Expected To Fall
27/6/2017
Fewer than 70 out of 11,645 New Zealand foreign trusts have reregistered following the introduction of tougher disclosure and eligibility requirements, with only three weeks left to go before the final deadline.

Abu Dhabi Tax-Free Zone To Launch Foundations
2/6/2017
Abu Dhabi Global Market, the low-tax international financial center, is seeking feedback on its proposal to allow the formation of "foundations," a trust-like entity widely used in civil law jurisdictions.

IoM Consults On Funds Sector Rules
22/5/2017
The Isle of Man Financial Services Authority, which supervises the island's financial services sector, is seeking feedback on draft guidance dealing with the governance of collective investment schemes.

Dubai Tax-Free Zone Seeing New Business From India
19/5/2017
The Dubai International Financial Centre, the leading financial hub in the United Arab Emirates, has become an increasingly popular destination for Indian banks, financial institutions, and fund managers, the zone has said.

Guernsey Issues Warning On 'Sark Company Registry'
18/5/2017
The Guernsey Financial Services Commission has issued a warning concerning an entity named "Sark Company Registry," while investigations are ongoing.

Abu Dhabi Free Zone Hopes To Attract Venture Capital Firms
15/5/2017
Abu Dhabi Global Market, the low-tax international financial center, has unveiled a regulatory framework for managers of venture capital funds.

Australian Budget Targets Housing, Tax Compliance
10/5/2017
Australian Treasurer Scott Morrison's 2017 Budget focused on measures to cool the housing market and crack down on tax avoidance.

Australia Delays Action On Stapled Structures
2/5/2017
The Australian Government has decided to extend a review into the taxation of stapled structures. It will not tackle the issue at the upcoming Budget.

BVI Financial Firms Need To Develop New Niches
13/4/2017
BVI Finance, the financial services industry promotional agency, has said the industry must actively adapt to target new opportunities and promote new offerings internationally.

ADGM Revises Pooled Fund Capital Req's
11/4/2017
Abu Dhabi Global Market, the low-tax international financial center, has revised the capital requirements applicable to managers of collective investment funds, with effect from April 10, 2017.

ADGM Consults On Allowing REITs
6/4/2017
Abu Dhabi Global Market, the low-tax international financial center, is consulting stakeholders on plans to allow the establishment of private real estate investment trusts.

Gibraltar To Offer Foundations
4/4/2017
Gibraltar's Parliament recently passed a bill permitting the establishment of Private Foundations.