Friday, February 3 2017 20:41
Naira Badalian

New royalty procedures for mining industries sector companies discussed at the Ministry of Economics

New  royalty procedures for mining industries sector companies  discussed at the Ministry of Economics

ArmInfo. Souren Krayan, the  Minister of Economic Development and Investments, on Febuary 3  discussed  upcoming reforms in the mining sector.  According to the  information of the Ministry press office, following Tigran  Khachatryan, the Deputy Minister of Economy, Armenian government,  meeting the  wishes of the mining sector companies, has submitted to  National Assembly  a draft package on tax discount modifications to   make the tax load easier. 

According to Khachatryan, in the result of this arrangement , in the  case the  indirect method of evaluation is applied to the royalty tax  base, it is proposed to implement the 80% limit instead of actual  90%/ It is expected also, that starting with 2017, the base used for  the calculation royalty will stand essentially closer to the limits  of benefits obtained. 

According to Narek Abrahamyan, First Deputy director of Zangezour  Copper Plant, t this is the first time that the Government responds  to the concerns expressed by companies, and that will lead to  essential reforms in the sector. In his turn, David Yedigaryan, the  Financial Director of Agarak Copper Plant, also expects for new  investments in  the sector based on the results of regulatory  changes.  Earlier,  the information shared with  ArmInfo by Lydian  Armenia operating the Amulsar mine, stated that 50-65% of all the  cost of global mining industry   is formed with operational and  capital costs, and the major part of those is being spent in the  country of residence. Taxes and other compulsory charges form up to  15-20%.  Hence,  a company, and, particularly, the company having  startup projects, as it is in the case of Amulsar, cannot get the  vast majority of financial benefits. Besides, there is an additional  tax in the contry regarding the mining sector. The volume of this tax  forms about 4% of net profit, and 12,5% of the pre-tax profit and  prior to interests payouts. Meanwhile, the profit tax in Armenia  forms 205> As a result, mining companies pay taxes which  form  40-50%, which is almost twice bigger than those for other kinds of  business. According to preliminary calculations, within  keeping the  current  tax rates total tax payments for whole the period of Amulsar  mine operatuion (which is 11 years) will  form about USD 488 mln.

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