On March 2 2011 the Sejm - the lower house of the Polish Parliament - ratified the Act on Taxation of the Extraction of Certain Minerals. The act presents a new approach to the taxation of natural resources, especially in relation to copper and silver. The new law will inevitably change the natural resources landscape in Poland.

The act provides that tax assessment for such resources will be based on the mass of extracted copper and silver, through a calculation based on the content of such metals in the ore or in the concentrate produced during the ore enrichment process. Tax will be calculated monthly. In addition, the production (extraction) of copper ore in quantities not exceeding 1 ton a month will not be taxable if it is used for scientific and research purposes.

The tax rates will depend on the average prices of copper and silver. Each month the minister of finance will announce the average prices of copper and silver for the previous month. This price will be based on:

  • the arithmetic average of the US dollar and the Polish zloty, as published by the Polish National Bank;
  • the arithmetic average of daily prices for copper for the past month (ie, the London Metal Exchange Daily Official and Settlement Price), fixed on the London Metal Exchange; and
  • the arithmetic average of daily prices for silver for the past month (ie, the London Silver Fixing), fixed on the London Bullion Market Association listing.

The maximum tax rate for the extraction of copper is PLN16,000 per tonne and the maximum tax rate for extraction of silver is PLN2,100 per kilogram.

This tax will not be considered as tax deductible in relation to income tax. The tax will be assigned to the state budget - according to the Ministry of Finance, the estimated budget revenues from this tax in 2012 will amount to approximately PLN1.8 billion and in the years following 2012 to approximately PLN2.2 billion.

The minister of the environment will be obliged to inform the minister of finance of any licences granted for the extraction of copper ore and silver (and the terms of such licences) within seven days of the date on which the act enters into force.

The Council of Ministers will examine the impact of the act on the copper and silver mining sectors (as well as on the public finance sector) and report to the Sejm, no later than two years from the date on which the act enters into force.

The act must now be adopted by the Senat (upper house of Parliament), signed by the president and published. The adoption process is expected to move forward without significant opposition or delay, so the act should be finalised soon. Although the exact date of its entry into force is not yet known, the new regulations are expected to come into force before the beginning of April 2012.

For further information on this topic please contact R Adam Kozłowski or Hubert Moryson-Kowalski at Norton Rose Piotr Strawa i Wspolnicy, sp.k. by telephone (+48 22 581 4900), fax (+48 22 581 4950) or email ([email protected] or [email protected]).