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%