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At present the revenue receiving from the sale of metal concentrates by metal ore mining companies is taxed at the profit tax and royalty. The latter is designed to compensate for the use of metallic ores, as well as for the profitability from the alienation of products obtained as a result of processing of metallic ores and their or soil management wastes.

The purpose of the adoption of the draft laws on Making Addendum and Amendments to the RA Tax Code and on Amending the Law on State Duty authored by the Government is to make the royalty system paid for metallic ores more responsive and progressive to international metal prices.

According to the RA Minister of Finance Tigran Khachatryan, the studies show that although the current royalty system is somewhat responsive to international metal prices in the sense that in case of the increase of the latter, the royalty rate, at the expense of the profitability component, is somewhat increasing, however the increase in the royalty rate is not enough to ensure fair and justified additional revenues for the state budget in the event of a significant increase of international prices.

Tigran Khachatryan also informed that the proposed solutions were discussed with the experts of the International Monetary Fund. According to the latter, the current royalty calculation system, in general, is in line with the effective systems used in the international practice.

The speaker answered to the deputies’ numerous questions, which were related to the royalty sales turnover, the amount of money deposited in the state budget, the expected expenses, the size of export duties and other professional issues.

It was noted that a stable and predictable tax environment for the mining sector will be formed, which will also ensure the competitiveness of companies operating in the sector in the international markets, will increase the investment attractiveness in the sector.

As a result of debate, the drafts were endorsed.