The International Monetary Fund (IMF) today published its technical report “Proposals for the 2022 tax reform: tax regime for the mining sector, capital gains and VAT on digital services”, requested by the Peruvian Government through the Ministry of Economy and Finance (MEF).
In the document, the international organization points out that the mining regime in Peru allows “a certain (moderate) space to increase the fiscal pressure of the sector without losing international competitiveness.”
“If it is decided to increase the royalty floor (which is calculated as a percentage of gross income), it is recommended that the increase be moderate, and in no case more than 1 percentage point. Above that level could generate abrupt jumps in the tax burden, causing the scale of progressive rates on operating profit to apply to a very small group of companies”, reports the IMF.
“The way in which this increase materializes is very important and that the changes proposed by the government avoid modifying the relative position of the tax burden in Peru with respect to that of its competitors,” he adds.
Likewise, it considers that it would be possible to moderately change the rates of taxes based on operating profit (Royalty and Special Tax on Mining). It is not recommended to change the base of said taxes, be it, for example, restricting the deduction of the depreciation of fixed assets, or eliminating the deduction of the Royalty from the income tax base.
“It could also be considered to slightly increase the marginal rates of the Special Tax on Mining, thus increasing the progressivity of the system,” he continues.