Loading ...Guatemala: Mining royalty payments set to increase
Last week in the politics section we noted the slight mystery of a new Vice-minister of Mining in Guatemala. This week the reasons behind the change may have become clear, as the country’s President Jimmy Morales announced (10) a whole range of tax increase proposals that include a bump of duty on fuel from Thee Quetzals (GTQ) to Five Quetzals (1 Quetzal = U$0.133) per US gallon, additions to VAT (sales tax) and corporate income tax back up to 29% (from 25%).
All those will affect mining costs in Guatemala indirectly, but the one that really matters is the Jimmy Morales proposal to raise royalties on extractive industries (i.e. O&G and mining) from 1% to 10%. At the moment, several mining companies in Guatemala are paying more than the legally stipulated 1%, with “voluntary payments” topping up royalties to between 5% and 5.5% (the highest profile cases are Goldcorp at Marlin and Tahoe Resources at Escobal). But the royalty initiative is only one of a total of 47 changes proposed by parliamentarians the current Mining Law, there will be a lot to talk about next week including one of the other main events a clause to give official prior consultancy rights to locals directly affected by any mining project. Theoretically this law already exists as part of the OIT169 international rule book to which Guatemala is a signee, but the country now wants prior consultancy in its own organic law.