November 24, 2007 / 3:32 AM / 12 years ago

Bolivia's Congress raises mining taxes

LA PAZ, Nov 23 (Reuters) - Bolivia’s Congress approved a reform to the mining tax code late on Friday that will substantially increase taxes on mining companies operating in the South American country.

Mining ministry spokesman Alfredo Zaconeta told Reuters the reform means mining companies will have to pay 37.5 percent of their income to the Bolivian state, up from 25 percent in the past.

The decision will affect several major global mining companies working in Bolivia, including U.S.-based Apex Silver Mines Ltd. (SIL.A) and Coeur d’Alene Mines Corp. CDM.TO (CDE.N).

The tax reform also broadens the scope of the Complementary Mining Tax (CMT) — which acts like a royalty — to include minerals that currently do not pay the levy, like indium and wolfram.

Zaconeta said the royalty tax will be directly proportional to the price of the mineral in the international market.

Currently, it ranges from 1 percent to 10 percent.

The reform also aims to close a legal loophole that grants miners hefty discounts on income tax payments, Zaconeta said.

After taking office as the country’s first president of indigenous descent in January 2006, leftist President Evo Morales drastically raised taxes on natural gas operations and nationalized reserves of the fuel.

He has repeatedly pledged to carry out similar reforms in the mining sector.

The tax hike and efforts to revitalize state-run mining company COMIBOL are at the heart of government plans to tighten the state’s grip on Bolivia’s vast reserves of tin, zinc, wolfram, lead, silver and gold. (Reporting by Eduardo Garcia; editing by Louise Heavens)

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