IMF to advise Peru on reform to increase mining taxes, says finance minister

24th September 2021 By: Reuters

LIMA – Peru's finance minister said on Thursday that the International Monetary Fund would advise Peru on a tax reform on the mining sector that will capture more revenue in times of high metal prices without affecting competitiveness.

"There is a need for more fiscal resources," finance minister Pedro Francke, a left-wing economist, said at the Perumin conference, attended by many mining executives in the world's No. 2 copper producer.

"It's not about changing the system we have ... but to raise rates in the higher (income) bands," Francke added. In addition to the IMF, Francke said the World Bank had also offered to help with the tax reform.

Mining is a key source of tax revenue in Peru and the new leftist administration of President Pedro Castillo has repeatedly said it wants to increase mining taxes to pay for new social programs.

Peru has one of the lowest tax-to-GDP ratios in Latin America, according to the Organisation for Economic Co-operation and Development, and Francke said he is eager to improve those numbers.

Francke's remarks are in line with what he told Reuters in an interview in early August, when he said higher taxes would be designed to not affect the mining sector's competitiveness.

Francke said he would unveil more details about the proposal next week, when he is scheduled to present the tax reform proposal to Congress.

Francke's remarks come after accompanying Castillo to the United Nations General Assembly, a trip where the two also held meetings with investors and mining corporations.

He said he had met with the CEO of gold miner Newmont , as well as executives from Freeport-McMoRan, Anglo American and Rio Tinto.

Freeport's CEO Richard Adkerson said at the Perumin conference earlier on Thursday that he had been "impressed" by Castillo after meeting with him.

"We agreed that we need to try to work together and to provide an opportunity for mining companies in Peru to be comfortable in investing," Adkerson said.