Future of resource taxation in Asia Pacific 

Hi, I'm Rod Henderson. I'm the ASPAC Regional Tax Leader for Energy & Natural Resources for KPMG in Australia.

They call it the ‘resource boom mark II’ now and since the global financial crisis the industry is definitely booming. In Australia we're experiencing it. In the federal budget the government announced that they're forecasting $300 billion of capital expenditure over the next five years and that peaks in the 2014 year. We have a $90 billion capital spend. So the real question is what is the impact of that on Australia and who is spending it? Of course we're seeing many investors come into Australia from China, India, Japan and Korea. In Australia, the government is looking for ways to collect revenue from this boom and we are seeing new taxes proposed, both the minerals resource rent tax and an expansion of the petroleum resource rent tax to cover onshore oil and gas projects. So the government is banking on this bringing in increased revenue to help fund the Australian government's programs.

You know we're at the mature end of the whole process of the introduction of these proposed mining taxes, the resource taxes, the minerals resource rent tax and the petroleum resource rent tax and it's been a very long and difficult process. With industry putting their views across and the government setting up consultative groups to take views from industry and there's been much engagement in the later part of this process which has been welcomed and actually is helping to shape the outcome of these new taxes. I think the lesson that many people have learned is that it's very important for industry to stay close with government and it's very important for governments to listen to industry to ensure that all views are taken into account in terms of turning a policy into real law which can be actioned across the future.

Right through the region we are seeing that companies in the industry are needing to get involved in submissions to government, in rulings and other mechanisms to ensure that they've used or put across as new policy is developed into law or even just around the administration of existing tax laws.

In the ASPAC region we are seeing an increased focus by governments on the collection of taxes from the resource sectors particularly mining, oil and gas. And it's comes in a number of ways that in China, they are reforming their royalty regime to a value based — based on the value of the commodity rather than on the volume — and of course that is to capitalize on the increased value of commodities. In countries like Vietnam and Indonesia for example, they have production sharing contracts but they also have an income tax. In production sharing contracts, we don't see them in Australia. They are a kind of joint venture between the government and the mining industry, and the tax is collected through that mechanism.

In New Zealand for example, we're seeing an increased focus in the oil and gas sector there on collection and enforcement. And the government there has indicated they are prepared to change the law to protect their revenue base and they can do that quite quickly. But really, right through the region we're seeing that the taxation authorities are very active, looking very closely at both oil and gas and mining companies in terms of ensuring that they collect their revenue. And the lesson really is to be prepared and be on the front foot, be proactive, engage with the revenue authorities to ensure that there are no surprises when they do come knocking.

Resource taxation is gathering more prominence as governments look for more revenues to fund their future programs. And we see this as an area where the industry and companies in the industry and KPMG helping those companies engage with governments, to ensure that any new resource taxes are fair and they are properly implemented and they take into account the industry views.