PERTH (miningweekly.com) – The Association of Mining and Exploration Companies (Amec) on Tuesday expressed its displeasure at the Northern Territory’s (NT’s) decision to move ahead with the Mine Rehabilitation Levy, as well as to remove deductions of companies that set up head offices in the state.

Amec regional manager Bernie Hogan said that the NT Treasurer David Tollner’s Budget for 2013 missed the opportunity to show the state’s support for the mineral exploration and mining industry.

“The new taxes being imposed on exploration and mining companies in the guise of a Mine Rehabilitation Levy are far worse than the system proposed by the state government two weeks ago,” Hogan said.

“There is no relief for these companies, which are now required to pay their usual environmental bond plus an additional 1% tax for operating in the Territory.”

Earlier this month, the state government outlined the proposed levy under which the value of the NT’s environmental bonds would be reduced by 10% and a yearly tax of 1% would be levied on the remaining 90%.

“This new tax regime is not the solution to mine rehabilitation, instead it appears to be financing services that are provided as business-as-usual in other states, like processing permits and financing the geological survey.

"On top of this and without any warning, the NT government announced they will remove deductions that encourage companies to set up headquarters in the Territory, and limit the ability of companies to internally trade between divisions.”

In his speech to the state Parliament, Tollner said that the claimable transfer pricing margin would be capped at 5.5%, except in circumstances where the royalty payer had a relevant transfer pricing arrangement in place with the Australian Taxation office.

Further, Tollner announced that there would be limits to the deductability of head office expenses, management fees and administrative labour costs to those costs incurred by an office located in the NT.

The measures were expected to increase the state revenue by some A$10.6-million, the Treasurer predicted.

“To add additional costs onto companies that are leading the way in providing economic development in the bush; employment in regional areas; and already delivering royalties to the Territory, shows a total lack of understanding from the government,” Hogan warned on Tuesday.

“In a global market where exploration and mining investment must find the most cost-effective use of funds, these taxes could easily send investment away from the Territory.”

Amec called on the state government to review the tax decisions and to engage with the exploration and mining industry to investigate other systems that would protect the NT’s environmental values without crushing industries.