Three Internal Revenue Resolutions on the mining sector were published in Official Registry Supplement No. 202 on March 16, 2018. The resolutions include:

I. Rules regulating costs that are part of the tax basis for calculating royalties on mining of nonmetallic minerals (Resolution NAC-DGERCGC18-00000103):

  • These rules are applicable to holders of small, medium and large scale nonmetallic mining rights in the exploitation stage. Mining exploitation is understood as the set of mining operations, work and tasks for the preparation and development of the deposit and the extraction and transport of minerals, within the perimeter of the concession.
  • The accounting systems and procedures used must be compatible with this resolution and allow the financial statements to serve as the basis for filing tax declarations. The financial statements will be used for computing mining royalties and tax obligations.  
  • The mining concessionaire will be responsible for recording income, costs and expenses separately for each concession.
  • For calculating nonmetallic mineral exploitation royalties the tax basis consists of the direct and indirect production costs; specific costs are determined as part of the tax basis, independent of their deductibility for tax purposes.
  • Investments in exploration and mine preparation must be recorded by the mining concessionaire as an asset, whose amortization will be computed in line with financial accounting rules.
  • Any movable or real corporal assets with a useful life exceeding one year, built or acquired by any means, to be used in mining concession activities must be considered for accounting purposes as property, plant and equipment required for mining activities, whose depreciation will be computed in line with financial accounting rules.

II. Reform of the single general provision of Resolution NAC-DGERCGC16-00000217 (Resolution NAC-DGERCGC18-00000106):

  • Resolution NAC-DGERCGC16-00000217 establishes general rules for withholding at the source by the taxpayer in connection with the commercialization of concentrates and/or metallic elements.
  • A prior requirement for each export transaction is the verification of payment of the pertinent withholding by the taxpayer; for this, the single general provision established that the Internal Revenue Services would make available to the National Customs Service (SENAE) the information necessary for verification of the payment of such withholding. This was reformed and now such information must be made available to the Mining Regulation and Control Agency.

III. Reform of Resolution NAC-DGERCGC16-00000218 (Resolution NAC-DGERCGC18-00000107):

  • Resolution NAC-DGERCGC16-00000218 establishes rules for compliance with the payment of amounts for mining royalties in connection with exports of metallic mineral substances exploited by mining concessionaires.
  • For each mineral substance transaction the mining concessionaire is required to pay the amount for mining royalties, provided certain conditions are met. The first condition was modified, and it was established that the transaction must involve exportation of metallic mineral substances exploited by mining concessionaires and classified under specific Customs sub-items.  
  • The single general provision was replaced, and the Internal Revenue Service will now make available to the Mining Regulation and Control Agency the necessary information to verify payment of the said amount.