Royalties and fees in the mining sector
Gold and diamond mining provide greater revenue for the government and require greater capital and labor investments than timber extraction. The Venezuelan government applies a 34 percent income tax rate to net income from mining companies and a 1 percent royalty on unrefined gold and diamonds. Venezuela’s income tax, which was recently lowered from 60 percent, is similar to that charged by other mineral-rich countries. [206]
Mining companies are charged a $0.002 per hectare area fee. During the exploration phase, mining companies are exempt from paying value-added taxes on imported equipment and are granted duty-free imports of specialized equipment during the life of the project. The government has also sought to attract mining investments by allowing mining companies to sell up to 85 percent of their gold freely, as opposed to selling exclusively to the Central Bank with payment in local currency. Companies are allowed a tax credit of 15 percent of profits to account for depreciation in the early years of a mine’s operation. The Las Cristinas concession, 70 percent of which is owned by Placer Dome, will earn an average of $84 million per year before income taxes. From a large mine like Las Cristinas, the government will earn approximately $29 million each year (see Table 7). Revenue from these taxes goes directly to the national treasury, although the regional Corporaci
