Peru says IMF sees leeway to hike taxes on mining sector

The Yanacocha gold mine in Peru. Credit: Wikipedia

Peru’s finance ministry said on Thursday that International Monetary Fund officials had concluded there is leeway in the country’s tax system for a reform to include higher taxes on the key mining sector.

Peru is the world’s No. 2 copper producer and hiking mining taxes is a cornerstone of socialist President Pedro Castillo’s agenda, in order to use the additional resources to fund social programs.

“The Peruvian tax system is internationally competitive, with a tax burden that is lower or similar to other resource-rich countries,” the finance ministry said about the IMF report.

“In that sense, the (IMF) says that, within that system, there is leeway to increase progressive (taxation),” it added.

The report has not been made public and the IMF has yet to comment on it.

Peru’s finance minister Pedro Francke has asked Congress for executive powers to reform the tax system. Congress has yet to vote on the request, which is mostly focused on the mining sector.

The government, however, has yet to spell out the details of its planned tax hike on the mining sector. Francke said earlier this year that he had enlisted the IMF in a bid to do so in a way that would not hurt competitiveness.

The mining industry has opposed the move, saying that taxes are already high in Peru and that any further increases would harm competitiveness.

(By Marcelo Rochabrun; Editing by Susan Fenton)

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