Valuation: Taxation

Taxation

The Valuation of mines for acquisition is done on the basis of the discounting of the post tax cash flows. Each country has its own peculiarity of corporate taxation. For the purpose of taxation, web based query will provide the rate of taxation application for that particular country. A good source for the tax information is a guide to taxation for mining companies published by the big 4 accounting firms. That will usually give a guide to the taxes which are applicable. As per materiality and the detailed working needed (at different stages) the tax department website needs to be studied thoroughly.

Tax = Profit Before Tax X Tax rate

Where Profit Before tax = (Revenue – Cost – depreciation) and Tax rate is the rate applicable for Mining companies. In India, the tax rate is currently, 32.445% (30% *(1.05)*(1.03))