We don’t pay no taxes! Harmony reveals how foreign mining companies avoid paying for PNG gold

While Australia is hiking up the taxes mining companies must pay and many South American countries are moving to nationalize foreign owned mines to ensure the benefits from mining remain on-shore, PNG politicians continue to allow mining companies to literally run off with our gold and silver avoiding any tax at all.

Even when they are not given generous tax holidays – like those granted to the Ramu nickel mine and Exxon-Mobil LNG project – foreign mining companies can still easily avoid PNG’s 30% corporate tax rate.

South African miner Harmony Gold, joint owner of Hidden Valley and the proposed Wafi-Golpu mine, explains below exactly how the foreign miners do it, using a combination of carried forward losses and generous deductions. In the example given by Harmony a profit of K150 million is reduced down to just K22 million and rather than paying K50 million in tax just K4.95 million is handed over (at an effective tax rate of just 3%).

5 Comments

Filed under Financial returns, Human rights, Papua New Guinea

5 responses to “We don’t pay no taxes! Harmony reveals how foreign mining companies avoid paying for PNG gold

  1. Gerard Dogimab

    Excellent coverage. Here in is the answer to the question, where does all the money earned from our world class mine go. Unless the government leaders and fat cat public servants understand this PNG will continue to loose out big time. For one thing the world trend is the opposite of what happens in PNG, – more tax and strict control and even nationalising the mines. We in PNG do have experience dealing with foreign mining companies since the Panguna Copper Mine, but have we learned anything. No! we only got a bloody 10 year war on Bougainville because of the we did not equitably spread the benefits. PNG must stop thinking that we owe it to the foreign money for mining etc. We owe it to ourself for the resources in this country and therefore negotiate fair returns. Tax breaks, tax holidays are no longer suitable leveraging mechanisms for foreign capital.

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