07/05/2010 - 11:00

Galaxy Resources unaffected by super tax

07/05/2010 - 11:00

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Galaxy Resources says the proposed resources super profit tax will not affect its operation near Ravensthorpe, with profits from the mine to come from a Chinese entity not subject to Australia's tax laws.

Galaxy Resources says the proposed resources super profit tax will not affect its operation near Ravensthorpe, with profits from the mine to come from a Chinese entity not subject to Australia's tax laws.

The announcement comes amidst declarations from other resource companies that say they need to rethink their Australian project portfolio.

On Sunday the federal government announced its proposal that all mining companies earning more than a six per cent annual profit, or the long-term bond rate, will have to pay a 40 per cent tax on all profits above that.

Galaxy today said that the downstream processing facility for its Mt Cattlin spodumene project is located in China, therefore owned by an entity outside of Australia's tax laws.

"Accordingly, profits from Galaxy's wholly owned Chinese entity will not be subject to the RSPT [resource super profit tax]," the company said in a statement.

"Profits will return from the Chinese entity to the Australian parent entity via repatriation of dividends.

"Galaxy's Mt Cattlin Spodumene Project in Ravensthorpe sells spodumene ore to the downstream Chinese entity at 'arm's length' market prices.

"As most of the profits generated are from the downstream value adding aspect of the project, the Mt Cattlin operation will not be subject to the proposed RSPT."

Galaxy added that other proposed tax changes stemming from the Henry review is not likely to have a significant impact on the company.

Shares in Galaxy climbed half-a-cent to $1.07 at 12:38 AEST.

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