I'm not an expert in this area but I believe it works (approximately) as follows:
Currently, mining royalties are paid to state Governments plus 30% federal Company Income Tax on Net Profit. I'm not sure what % the royalties work out to or if they are deductible as an expense in the calculation of Net Profit before tax.
The proposed regime is 40% Resource Super Profits Tax (inluces state royalties that are credited against the 40%). This RSPT is to be calculated on a complex (yet to be determined) formula and becomes a tax deduction. Any remaining net ptofit will then be taxed at 28%.
There will also be other (new) credits for project development costs that will lessen the burden.
So it appears to me that the overall rate will go from something above 30% to something below 40%.
I don't understand BHPs statement that the effective rate will become 57% because it appears to me that the bulk of the Profit will be taxed at 40% and the balance at 28%, giving a net rate below 40%.
I could be wrong here so hopefully somebody else can clarify this.
BRM Price at posting:
$3.30 Sentiment: Hold Disclosure: Held
