During 2003, CIMG commenced work on a multi sponsor project on Mining Taxation in China. This took the form of a structured workshop between a group of interested  industry sponsor companies and SAT (State Adminsitration of Taxation), using an existing and successful dialogue process established by FDI Oil and Gas companies in China and brokered by a leading tax consultancy.

The group held a two day workshop in September 2003 at which the main taxation themes of interest to foreign investors in China’s mining industry were discussed with senior officials of SAT. The major sponsors brought tax expertise from four continents to attend and contribute to the workshop.

Subsequently, and in response to a request from SAT, the sponsors submitted data on points of discussion and provided background information on comparative tax regimes in selected exploration investment venues around the world.

SAT is engaged in reviews of existing tax legislation in China and appeared open to constructive comments and submissions in respect of the tax aspects of inward investment in mining.

The main areas covered in the discussions and in data provided to SAT on comparative tax regimes were:

• Tax loss carry forward/carry back
• Tax depreciation policies
• Preparatory expenses – definition and treatment
• Restoration and reclamation expenses
• Combination of accounts – ways in which tax losses incurred in relation to an unsuccessful project may be utilised against the production of income of other successful mines held by the same mining group, but in a different legal entity.

Sponsorship for the 2003 workshop was provided in three tiers as follows:

Major: Anglo, BHP Billiton, Placer, Rio Tinto, Western Mining,
Minor: Anglogold, Angloplats, Asian American, De Beers, Ivanhoe, Kumba
Output info: Mundoro, Rod Morphett, Yangtze Investments

We believe that the workshop format is an effective means of engaging with SAT and will be proposing a follow-up event in late 2004 or early 2005.

Should you wish to view the output of this workshop please contact the CIMG Secretariat at info@cimg.org.cn.