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Mining tax likely won’t budge

Content image - Phnom Penh Post
Workers inspect the framework for a mineshaft at Mesco Gold’s Phum Syarung Project construction site earlier this year in Ratanakkiri. The government plans to implement industrial reforms in the mining sector by the years end. Photo supplied

Mining tax likely won’t budge

Cambodia's new mining law is on track for adoption by the end of this year and will introduce a raft of reforms to the sector, a senior official said, although the country’s mining tax will likely remain the same.

Meng Saktheara, secretary of state at the Ministry of Mines and Energy, told the Post last year that the ministry may consider reducing Cambodia’s tax on mineral resources profits from 30 to 20 per cent, inspired by a scrapped Australian mining law.

However, Saktheara said last Friday that as the law approaches adoption, “it’s likely the 30 per cent rate will remain”.

“We will have to introduce some additional fiscal tools,” Saktheara said, adding that any government share of private investors’ take would be comparable to other countries in the region.

Saktheara said non-tax “incentives” would likely be part of the new law, such as beefing up Cambodia’s scattered database of maps and statistics on what lies below the ground.

“You need to have good information that shows great potential to attract investors.”

Richard Stanger, president of the Cambodia Association for Mining and Exploration Companies, said that the tax rate remaining at 30 per cent was “acceptable” for mining firms.

“It’s alright, that’s the basis on which we came in,” he said, adding that the sector pays a host of other sums aside from the tax, such as export fees and royalties.

“Frankly, the mining and exploration industry is long term. Capital costs of setting up are high.”

Stanger said that the government had considered increasing the law’s tax rate above 30 per cent at one point in the drafting process, although the mining community had successfully pushed against the move due to its high costs.

Taxes are only one part of the upcoming law’s ambitious scope, however.

The law aims to introduce predictability and transparency in the Kingdom’s mining sector, which has long struggled against illegal mining and idle mining licensees who spend years occupying potentially valuable space without extracting.

“The major step will be to enforce the performance of the licensees,” Saktheara said.

No legal mining operation has extracted and sold minerals from Cambodia so far, with Indian firm Mesco Gold saying it expects to begin extracting its prospect in Ratanikkiri’s O’Yadav district next year.

The law is currently at the Council of Ministers level, and will be passed on to be signed by the Prime Minister Hun Sen following inter-ministerial consultation, Saktheara said.

Because it will add on to the existing Law on Mineral Resource Management and Exploitation from 2001, the legislation will not require debate at the National Assembly.

Although the new law has not yet been passed, the Ministry of Mines and Energy began a clampdown on illegal artisanal mining late last year, even using military police in certain remote areas.

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