Tax Stabilization Clause. 23.1. The State, through MEM, guarantees the Contractor the Benefit of tax stability during all the validity of the contract, so it shall be only subject to the tax regimen in force at the Contract Signature Date.
Tax Stabilization Clause. If a provision of the Tax Law, at the date of this Agreement is changed or repealed, or new fiscal impositions in the nature of a Tax or duty on the Company are made by the Government after the date of this Agreement, except for changes expressly provided for in this agreement, and as a result the Company is adversely and significantly financially affected or its liabilities are materially increased, the Parties must agree on a fair and reasonable method to compensate the Company for those changes or new fiscal impositions. For greater clarity, the Company shall be bound by all non-discriminatory changes in Applicable Law concerning health, safety, labor, the environment, and to address the proximate human rights impacts of mining provided that the changes in social and environmental standards are reasonable and generally accepted Good Industry Practice.
Tax Stabilization Clause. This is likely the most controversial clause in the MMDA. Commentators had very serious and divided concerns about the use of stabilization clauses, particularly as it may be difficult to distinguish between the stabilization of tax regimes and the stabilization of other regimes, such as those that protect the environment and promote social development. Many comments suggested that a stabilization clause is inappropriate for the MMDA or any other agreement, particularly as a starting point for negotiations. Some States, for example, no longer allow stabilization. Other comments strongly advocated for the inclusion of a stability clause. These comments noted that investors in the mining sector require tax stability, and proof of a strong record by the State in honoring agreements related to tax stability. Many comments suggested that, regardless of one’s position on tax stabilization, a model agreement should not assume a stabilization clause, but should leave it up to negotiating parties to decide whether such a clause is necessary. Commentators suggested that the best approach is one that helps all parties balance their economic interests.
Tax Stabilization Clause
