Armenian government to revise royalty system applied to mining companies
Finance Minister Tigran Khachatryan told a Cabinet meeting on Thursday that the amendments aim to make the royalty system more fair and efficient.
"A royalty is a fee that is imposed by local or central governments on either the amount of minerals produced at a mine or the revenue or profit generated by the minerals sold from a mine in addition to other taxes," he clarified.
Khachatryan said that the final payments made by companies engaged in exploitation of metallurgical deposits were last revised last autumn when a state duty was established on export of metal concentrate, prompted by a significant rise in international metal prices, increasing the profitability of metallurgical deposits.
The minister noted that international metal prices began to rise in the autumn of 2020, rising from $6,500 to $7,800 per ton of copper by early 2021, and in July 2021 the price had already exceeded $9,300.
He said the proposed amendments call for termination of application of state duties on copper and molybdenum concentrate deposits and molybdenum exports starting from January 1, 2023, and for revision of the royalty system.
‘Instead of state duties we plan to use a new additional element of royalty which will be applied when the income of a mining company exceeds a certain threshold," he said.
According to Khachatryan, the change will not raise the tax burden for mining companies with 10 percent profitability. He specified that in that case a company will pay a 15% royalty of the excess income -0-
