Mine taxation

Question 1

represent a substantial cost of doing business in the minerals industry and often have a significant impact on corporate investment decisions

Answer 1

Taxes

Question 2

effect of higher taxes

Answer 2

reduce project yields and tend to drive investment capital elsewhere.

Question 3

is based on the concept that minerals are a free giftof nature for the benefit of all mankind, and therefore the benefits derived from resource extraction should be shared by all.

Answer 3

Natural Heritage

Question 4

assumes that since an ore body cannot be dismantled or moved to another location, any mine can be taxed with impunity.

Answer 4

Captive Theory

Question 5

Taxes are generally implemented to achieve one or more of the following objective

Answer 5

> Raising Revenue
Economic Development
Price Stability
Wealth Redistribution
Regulatory Medium

Question 6

Taxes are generally imposed on one of the following bases:

Answer 6

1. Income
   2 Wealth
   3 Expenditures
   4 Activity

Question 7

Special Features of Mining

Answer 7

• Bonanza image
• High risk
• Economic rent
• Exhaustibility
• Capital intensity, long lead times
• Uncertainty in determination of ore deposit value
• Indestructibility of metals
• Rental payments

Question 8

Usually based on net income, or gross income less certain defined deductions. The tax rate is generally either fixed or progressive (i.e., higher levels of net income pay higher tax rates.)

Answer 8

Income Tax

Question 9

Typically an ad valorem (according to value) tax based on appraised value of real and personal property

Answer 9

Property Tax

Question 10

A tax unique to the extraction of natural resources (renewable as well as nonrenewable) and commonly considered to be an excise tax.

Answer 10

Severance Tax

Question 11

A tax imposed upon the consumption of a retail sale.

Answer 11

Transaction Tax

Question 12

A tax imposed on the manufacture, sale, or consumption of specific, selected commodities and/or activities

Answer 12

Excise Tax

Question 13

referring to equal treatment of similarly situated taxpayers

Answer 13

Equitable

Question 14

referring to a tax that can be readily and easily assesses, collected, and administered.

Answer 14

covenient

Question 15

referring to consistency and stability in the prediction of tax-payers’ bills and the amount of revenue collected over time.

Answer 15

Certain

Question 16

referring to the fact that compliance and administration of a tax should be minimal in terms of cost

Answer 16

Economical

Question 17

referring to the fact that a tax should have the ability to produce a sufficient and desired amount of revenue to the taxing authority.

Answer 17

Adequacy

Question 18

referring to the use of taxes to reallocate resources in order toachieve various specific social and economic objectives

Answer 18

Achievement of social and economic effects

Question 19

recognizing that a tax should not encourage inefficient allocation of resources by being so extreme that taxpayers make counterproductive economic decisions

Answer 19

Neutrality

Question 20

total income derived from product sales

Answer 20

Revenue

Question 21

an amount deducted from revenue to arrive at taxable income.

Answer 21

Deduction

Question 22

the amount on which a tax is calculated

Answer 22

Taxable Income

Question 23

a deduction over a period of y

Answer 23

Depreciation

Question 24

any deduction other than depreciation or depletion allowed over a period of years

Answer 24

Amortization

Question 25

an expenditure treated as a deduction in the year it is made

Answer 25

Expense

Question 26

to save an expenditure for deduction in one or more later years.

Answer 26

Defer

Question 27

to establish an account for an expenditure which, depending on the type of expenditure, may or may not qualify as a deduction.

Answer 27

Capitalize

Question 28

the act of foregoing a deduction until some amount of money is recouped; is generally associated with an amount of money which was previously expensed, but which should have been capitalized.

Answer 28

Recapture

Question 29

the amount in a capitalized account at any point in time. The original basis is usually the cost of an asset.

Answer 29

Basis

Question 30

an outflow of money for the purchase of goods or services

Answer 30

Expenditure

Question 31

3 types of Expenditures for Tax purposes

Answer 31

> expenditures for items which are consumed in one year and are non-recoverable > expenditures for assets which are consumed more gradually and are nonrecoverable > expenditures for asses which are not consumed and are recoverable after the end of the project.

Question 32

If the Basic Government Share is less than 50% of the Net Mining Revenue, an _____________________ to increase the total government share to 50% of the Net Mining Revenue must be paid by the FTAA holder. (grabe pangwarta sa gobyerno ah)

Answer 32

Additional Government Share

Question 33

EPEP stands for

Answer 33

Environmenal Protection and Enhancement Program

Question 34

EPE is equivalent to ______ of Total Project Costs

Answer 34

10%

Question 35

the operational link between the environmental protection and enhancement commitments under the Mining Act revised implementing rules and regulations as well as those stipulated in the ECC and the Contractor's plan of mining operation

Answer 35

EPEP

Question 36

to implement its AEPEP, FTAA holder must allocate annually _______ of its direct mining and milling cost depending on the environment/geologic condition, nature and scale of operations and technology employed in the FTAA Area.

Answer 36

3%-5%

Question 37

CLRF

Answer 37

Contingent Liabiloty and Rehabilitation Fund

Question 38

MTF

Answer 38

Monitoring Trust Fund

Question 39

The Mutipartite Monitoring Team consists of

Answer 39

Govt representatives, affected community, contractors, ICC/IP, NGOs

Question 40

RCF

Answer 40

Rhabilitation Cash Fund

Question 41

established to ensure compliance with the approved rehabilitation activities and schedules for a specific mining project phase, including research programs as defined in the EPEP and/or AEPEP

Answer 41

RCF

Question 42

consists of a replenishable amount of at east PHP50,000

Answer 42

Envi. Trust Fund

Question 43

mine waste and tailings fees collected semiannually based on the amounts of mine waste and mill tailings generated for the said period.

Answer 43

Mine Waste and Tailing Fees Reserve Fund

Question 44

mining contractor must make annual contributions to an____________ in accordance with the contractor's mandatory Final Mine Rehabilitation and Decommissioning Plan (FMRDP) and must contain cost estimates, taking into consideration expected inflation, technological advances, the unique circumstances faced by the mining operation, among others.

Answer 44

Final Mine Rehab and Decomissioning Fund

Question 45

Royalties paid to Ips/ICC

Answer 45

not less than 1%

Question 46

of the Mining Act provides that contractors in mineral agreements and FTAAs shall be entitled to fiscal and non-fiscal incentives as provided in the Omnibus Investments Code or EO 226, as amended.

Answer 46

Chapter XVI