NEW DELHI, JULY 09, 2010: THE Australian government, under pressure from the mining industry, has caved in.

The government has withdrawn the resource super profits tax (RSPT), announced three months earlier, that sought to levy a tax on mining profits in excess of normal rates of return.

However, unwilling to give up the idea, the government has instead announced the introduction of a mineral resource rent tax (MRRT) that would apply to the mining of coal and iron ore in Australia. The government has also extended the current Petroleum Resource Rent Tax (PRRT) regime to all Australian offshore and onshore oil and gas projects, including the North West Shelf. While MRRT is fixed at 30 per cent, the PRRT is slotted at 40 per cent.

With this, the government has reduced the impact of the RSPT that was expected to hit 2500 mining companies to about 300 companies. Other commodities are not included under this framework.

These taxes on natural resources shall be levied with effect from July 1, 2012 and expected to bring in their wake a reduction in the corporate tax rate from 30 per cent to 29 per cent in 2013-14. The reduction in corporate tax to 28 per cent announced earlier shall no longer apply.The exploration tax offset that was to apply for Australian exploration expenditure incurred on or after 1 July 2011 will not be introduced.