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BIL
BIBLT
BIL - Bhp Billiton Plc - Proposed mineral resource rent tax
BHP BILLITON PLC
SHARE CODE: BIL
ISIN: GB0000566504
2 July 2010
PROPOSED MINERAL RESOURCE RENT TAX
BHP Billiton, Rio Tinto and Xstrata said today that they are encouraged by
the Federal Government`s announcement that it proposes to replace the
Resource Super Profits Tax with a Mineral Resource Rent Tax (MRRT).
The mining industry has consistently stated that any tax reform needs to
satisfy core principles that include:
* ensuring that any new tax is not applied retrospectively, so that
existing projects where investment decisions have already been made are not
adversely affected; and
* ensuring a competitive effective tax rate that will not disadvantage
Australia as an investment destination.
As a result of constructive discussions, the proposed new tax will apply only
to iron ore and coal resources from 1 July 2012.
The companies agree that the proposal presented by the Government represents
very significant progress towards a minerals taxation regime that satisfies
the industry`s core principles.
The companies will continue to work constructively with Government to ensure
that the detailed design of minerals taxation maintains the international
competitiveness of the Australian resources industry into the future.
Details of the Government announcement are attached.
Further information on BHP Billiton can be found on our Internet site:
www.bhpbilliton.com
Australia United Kingdom & South Africa
Amanda Buckley, Media Relations Andre Liebenberg, Investor Relations
Tel: +61 3 9609 2209 Mobile: +61 Tel: +44 20 7802 4131 Mobile: +44
419 801 349 7920 236 974
email: email:
Amanda.Buckley@bhpbilliton.com Andre.Liebenberg@bhpbilliton.com
Fiona Martin, Media Relations
Tel: +61 3 9609 2211 Mobile: +61 427 777 908
email: Fiona.Martin2@bhpbilliton.com
Leng Lau, Investor Relations
Tel: +61 3 9609 4202 Mobile: +61 403 533 706
email: Leng.Y.Lau@bhpbilliton.com
Illtud Harri, Media Relations
Tel: +61 3 9609 2898 Mobile: +44 7920 237 246
email: Illtud.Harri@bhpbilliton.com
BHP Billiton Limited ABN 49 004 028 077
Registered in Australia
Registered Office: 180 Lonsdale Street
Melbourne Victoria 3000 Australia
Tel +61 1300 55 4757 Fax +61 3 9609 3015
Americas
Scott Espenshade, Investor Relations
Tel: +1 713 599 6431 Mobile: +1 713
208 8565
email:
Scott.Espenshade@bhpbilliton.com
Ruban Yogarajah, Media Relations
Tel: US +1 713 966 2907 or UK +44 20 7802 4033Mobile: UK +44 7827 082 022
email: Ruban.Yogarajah@bhpbilliton.com
BHP Billiton Plc Registration number 3196209
Registered in England and Wales
Registered Office: Neathouse Place
London SW1V 1BH United Kingdom
Tel +44 20 7802 4000 Fax +44 20 7802 4111
Members of the BHP Billiton group which is headquartered in Australia
MINERAL RESOURCE RENT TAX HEADS OF AGREEMENT
The Design of the Minerals Resource Rent Tax
The new resource tax will apply from 1 July 2012 only to mined iron ore and
coal. All other minerals are excluded.
The rate of tax will be 30% applied to the taxable profit at the resource.
Taxable profit is to be calculated by reference to:
* The value of the commodity, determined at its first saleable form (at
mine gate) less all costs to that point
* An extraction allowance equal to 25% of the otherwise taxable profit
will be deductible to recognise the profit attributable to the extraction
process. (i.e. this to only tax the resource profit)
* Arms length principles on all transactions pre and post first
saleable form.
MRRT is to be calculated on an individual taxpayer`s direct ownership
interest in the project.
There will be no MRRT liability for taxpayers with low levels of resource
profits (i.e. $50m per annum).
All post 1 July 2012 expenditure is to be immediately deductible for MRRT on
an incurred basis. Non-deductible expenditure will be broadly consistent with
PRRT.
MRRT losses will be transferable to offset MRRT profits the taxpayer has on
other iron ore and coal operations.
Carried-forward MRRT losses are to be indexed at the allowance rate equal to
the LTBR plus 7 percent.
The MRRT will be an allowable deduction for income tax.
All State and Territory royalties will be creditable against the resources
tax liability but not transferable or refundable. Any royalties paid and not
claimed as a credit will be carried forward at the uplift rate of LTBR plus 7
percent.
Starting Base
The starting base for project assets is, at the election of the taxpayer,
either:
* Book value (excluding the value of the resource) or
* Market value (as at 1 May 2010).
All capital expenditure incurred post 1 May 2010 will be added to the
starting base and depreciated against mining operations from 1 July 2012.
"Project assets" for the purpose of the MRRT will be defined to include
tangible assets, improvements to land and mining rights (using the Income Tax
definition).
Where book value is used to calculate starting base, depreciation will be
accelerated over the first 5 years. The undepreciated value will be uplifted
at LTBR plus 7 percent.
Where market value is used to calculate starting base, there will be no
uplift and depreciation will be based on an appropriate effective life of
assets, not exceeding 25 years.
Any undepreciated starting base and carry forward MRRT losses are to be
transferred to a new owner if the project interest is sold.
Date: 02/07/2010 07:32:01 Produced by the JSE SENS Department.
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