Report summaryOn 9 May 2016, the China Ministry of Finance announced it was extending its resource tax reforms to cover several metals, including iron ore, copper, zinc-lead and gold. There are two key parts to the reform: firstly, the resource tax will shift from being based on volume to being based on price. Secondly, the mineral resources compensation fee will be reduced to zero, and all other resource-related fees collected by local governments will be abolished. We expect the new measures will help cut costs for mines, but only slightly. A resource tax based on price rather volume will benefit miners when metal prices are low. The cancelling of all other resource-related grey costs will help build a more transparent and healthier tax environment.
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