Abstract
The capital allowance structure for mining projects in developing countries affects the supply price of investment by determining the payback period, reinvestment and the timing of government receipts. Using the capital allowance structures of Sierra Leone, Tanzania, Zambia, Botswana, Papua New Guinea and Malaysia, the article develops a financial model and examines the effect of capital allowances on foreign investor and host government cash flows under various cost-price conditions. The study stresses the importance to governments of making accelerated depreciation a flexible tool to trade off against other elements in the fiscal package. From the government viewpoint, faster write-offs of capital are preferable to a tax holiday. The article places particular emphasis on evaluating the relationship between capital allowances, income tax and a rent resource tax.
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Disclaimer: All third-party content on this website/platform is and will remain the property of their respective owners and is provided on "as is" basis without any warranties, express or implied. Use of third-party content does not indicate any affiliation, sponsorship with or endorsement by them. Any references to third-party content is to identify the corresponding services and shall be considered fair use under The CopyrightLaw.