[2013] GLAVE, Manuel y Gerardo DAMONTE. Profit-based versus Production-based Tax Regimes: Latin America’s Experience. ELLA. Economic Development, Extractive Industry Investment Policies, Policy Brief 4.

In the context of both increasing mineral prices and mining companies’ profits, governments naturally seek to maximise their revenue in order to achieve maximum social welfare. By taking a panoramic look at the taxation regimes in place across Latin America, the authors compare two different regimes: profit-based vs. production-based fiscal regimes. This Brief uses the examples of Peru and Chile to highlight Latin American experiences when migrating from production-based to profit-based tax regimes, in particular arguing that profit-based regimes seem to be the best choice in the current Latin American context of a mining boom. It also addresses the institutional conditions needed to successfully move from one regime to another. Finally, it underlines enabling factors and policy lessons that may prove useful for other regions.