Today, BHP Billiton Chief Executive Officer, Marius Kloppers, said the company was encouraged by the Australian Government’s decision to replace the proposed Resource Super Profits Tax with a Mineral Resource Rent Tax (MRRT) on mined iron ore and coal.
“As we have previously stated, BHP Billiton believes that tax reform that is prospective, competitive, differentiated and resource-based will ensure that the Australian mining sector continues to grow through investment in the industry which benefits all Australians.
“We are encouraged that the MRRT design is closer to our frequently stated principles of sound tax reform, in that the proposed tax will be prospective in its treatment of profits from our iron ore and coal businesses, and not apply to the other commodities in our portfolio.
“At the request of the Prime Minister, there have been constructive discussions in the last week with the Deputy Prime Minister and the Resources Minister which have resulted in a material improvement from the original tax proposal,” Mr Kloppers said.
The proposed MRRT is closer to meeting the tax design principles in the following ways:
- Prospective – businesses can transition into the MRRT at market value of the business (not the previously proposed book value) with depreciation over 25 years. This is particularly important for the iron ore and coal operations which have been in existence for many years.
- Competitive – the headline tax rate is 30 per cent, with a 25 per cent allowance for the extraction activity such that only the resource profit is taxed. Company tax will continue to be paid.
- Differentiated – the tax applies to coal and iron ore resources with all other resources exempt.
- Resource based – taxable profit will be that at the mine gate and not on downstream processing or infrastructure.
“There is still a great deal of work to be done before this tax is enacted, and we will work constructively with the Government to ensure that the detailed design of minerals taxation maintains the international competitiveness of the Australian resources industry into the future and is in the long term interests of the industry and all Australians,” Mr Kloppers concluded.