On May 6, 2013, the Government of Québec unveiled its new mining tax regime. Starting in 2013, all mining operations will be required to pay a royalty or a tax on profits, whichever is greater under the regime.
All mine operators active in Québec will now have to pay a minimum royalty to the Government, that is applied to the value of the ore extracted at the mine shaft head. In consideration of smaller operations and to make it easier to start a mining project, the royalty rate will be set at 1% for the first $80 million of ore extracted. For the excess, the rate will be 4% of the value of ore extracted. This royalty does not consider whether the operation is profitable. Also, this royalty does not permit deductions for other royalties that may also be payable on the same ore extracted.
The mining tax on profit will be calculated according to a progressive rate structure. The new tax rates to be applied will be 16%, 22% or 28%, depending on profit margin. Québec has provided for three segments of profit margin (from 0%-35%, from 35%-50% and from 50%-100%).
Mining operators in Québec will be required to pay mining taxes corresponding to the greater of its mining tax royalty or its mining tax on its annual profit for the fiscal year, in every fiscal year starting after December 31, 2013.
If you have questions about Québec’s new mining tax, contact any member of Clark Wilson LLP’s Corporate Finance & Securities Group.