:quality(75)/cloudfront-us-east-1.images.arcpublishing.com/bloomberglinea/ZSGKKMR3RDL6KWUOREV5XDF5V4.jpg "A miner working inside El Teniente copper mine, property of national mining company Codelco, near Rancagua in Chile. Source: Bloomberg")
Santiago — The government of Chilean President Gabriel Boric on Monday announced an investment plan for the country, which includes six lines of action and 28 measures, among them the reduction of the ad-valorem tax for copper and mining expansion projects for the sector, a tax based on the percentage of the price of the commodity.
According to the plan, new copper mining projects will be exempt from the ad-valorem component of the royalty for five years in order to avoid impacting investment decisions.
The idea is to incentivize investment in new projects and the expansion of deposits, while maintaining a taxation in which copper income is shared “fairly between the state and the private sector”, according to the proposals.
The plan establishes the creation of a $500 million fund of tax credits against first category taxes, which will be allocated to investment projects that have a “high multiplier effect”.
A competitive mechanism will be used to which any company with an investment project that can be materialized as of 2023 will be able to apply for the reduction.
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The measures announced also include the extension of tax cuts for small and medium-sized companies for two years, increasing public investment by 10% in 2023 compared to 2022, granting guarantees on the financing of part of the down-payments for first-time homebuyers, and strengthening the digitalization of processes, with an emphasis on strategic plans for the decarbonization of the country’s energy matrix.
The announcement of the plan, dubbed ‘Let’s Invest in Chile’, (#InvirtamosEnChile), was made on the government’s Twitter account:
Finance Minister Mario Marcel said in a press conference on Monday that the incentives will boost investment by at least five percentage points in 2023, while the aspects relating to taxes will be incorporated into the modifications being made as part of the tax reform.
The plan comes amid a weakening of investment due to local and global factors.
“You can’t block out the sun with one finger, one cannot deny the difficult conditions, both internal and external, in which the world and Chile find themselves economically. But it’s not enough to say what those conditions are, we have to be proactive and face them and change them,” Boric said during the presentation of the measures.
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