What’s the economic contribution that mining companies make to public finances globally?

 

The latest report from the Total Tax Contribution team looks at the economic contribution mining companies make to public finances. This is the second global study for the mining sector, which aims to bring greater transparency to the wider economic contribution that mining companies make to the public finances in their countries of operation. The mining industry, perhaps more than most others, remits large amounts of non-income taxes to various levels of government in different forms. However, these non-income taxes are seldom highlighted in financial statements, leaving an incomplete picture of the contribution that mining companies make.

 

The study was conducted using the PwC TTC Framework which provides a standardised methodology for companies to measure and communicate all the taxes and contributions that they pay. Data was collected from 22 mining companies that shared information on their taxes and other contributions paid to government, in 20 countries of operation, during their accounting year to 31 December 2008.

 

The study covers a turbulent period, which saw the advent of the global financial crisis and a fall in commodity prices. The results show that despite the downturn, mining companies continue to make a large economic contribution in their countries of operation. On average, taxes and contributions borne by mining companies are equivalent in size to 10.8% of their turnover. Importantly, corporate income tax represents only 40% of all the total taxes and contributions that these companies bear.

 

With mining companies facing increased public scrutiny regarding the taxes the pay, and with some governments looking to the mining sector for new or revised tax regimes, this report is intended to inform the debate on the sector’s overall contributions to government revenues. The study also highlights some of the business benefits for mining companies through increased transparency in their tax reporting.

 

If you have any queries regarding the study or would like to learn more about how the TTC Framework might help your business, please do not hesitate to contact the advisers listed on this page.