Quebec tax burdens miners

An independent study conducted by PwC on provincial taxation of mining companies in Canada reveals that nearly 41% of mining profits in Quebec are paid as taxes and royalties, including the federal component, while the Canadian weighted average based on the value of output is 36.8%. Quebec ranked 11^th back in 2007, when it was the lowest taxing province; today, it ranks third.

"Amid the ongoing lively debate over mining company taxation in Quebec, a number of the study's conclusions are relevant when it comes to taking a new look at Quebec's tax regime, particularly income tax and the mining tax", said Nochane Rousseau, leader‚ mining industry services and PwC's Plan Nord Initiative.

• In Canada, the overall tax burden (combined federal/provincial) in all jurisdictions fell between 2007 and 2011 (going from weighted average based on the value of output of 40.7% to 36.8%), with the exception of Quebec, where it rose from 35.4% to 40.9%.
• In Quebec, 41% of mining profits are paid as taxes and royalties, including the federal component. Quebec has the third-highest overall tax burden (combined provincial/federal) in Canada.
• Among the four main mineral-producing provinces, (Saskatchewan, British Columbia, Ontario and Quebec), Quebec places the highest tax burden on mining companies.
• As regards the provincial tax burden, Quebec rose from 11^th place (16.7%) in 2007 to fourth place (25.9%) in 2011.
• Quebec levies the second highest mining duties over a mine's useful life.

Putting things in perspective, Rousseau said, "The review of Quebec's mining duties regime has had a significant impact on companies' tax burdens. Quebec's mining taxes are now among the highest in Canada. The mining duties collected by the provincial government over a mine's useful life are also among the highest."

The study summarizes the main features of tax regimes in Canada as they pertain to income taxes and mining taxes. Quantitative examples are provided to illustrate how these regimes are applied. The study also includes all of the tax policies affecting mining companies, including federal and provincial income taxes. provincial capital tax  and provincial mining tax, including the recent changes to Quebec's mining duties regime.

For further information on the study's conclusions, please consult the Industries/Mining section of PwC's website (www.PwC.com/ca) or download the study.