Search results

Filters

  • Journals
  • Authors
  • Keywords
  • Date
  • Type

Search results

Number of results: 2
items per page: 25 50 75
Sort by:

Abstract

The extraction of mineral deposits is usually charged with additional taxes or royalty fees that go beyond the general income tax. As a rule, countries prefer stable sources of fiscal revenues based on the volume of raw material extraction, and investors prefer models based on profit tax, i.e. taking operating costs and risks lower than the expected profitability of the project into account. As a rule, too high a burden for the mining sector affects investors’ decisions regarding the introduction of new investments. There are a number of examples where excessive fiscal burdens force investors to move to countries with more favorable tax systems. An analysis of various forms of taxation of mining enterprises around the world has been presented and compared with the system implemented in Poland. Usually, the countries that apply the royalty fee in the mining sector at the same time introduce a number of adaptation mechanisms. This is crucial for new investments due to the fact that they may to some extent compensate for the high costs of transition from the investment to the operational phase. In most cases, several incentive mechanisms are used at the same time, e.g. the accelerated settlement of investment expenditures and the unlimited settlement of losses. The copper and silver mining tax introduced in Poland increased the discounted effective tax rate (ETR) from 38.5% to 89% for the entire investment period, which resulted in a 11-year return on investment, as well as a drop in the internal rate of return (IRR).There are currently no mechanisms in Poland which would balance the burden of this tax for a new investor. In order to balance the extraction tax for certain minerals in terms of the IRR and ETR key indicators, the introduction of several adaptation mechanisms has been proposed. For new investments the most essential mechanism is the preferential settlement of capital expenditures incurred in the pre-production phase of an investment. The others include accelerated amortization, the ability to deduct certain expenses for the exploration phase from the tax base, along with an extended tax loss settlement period, or a mechanism for deducting a certain percentage of investment expenses directly from the tax.
Go to article

Abstract

The aim of the article is to present the issue of risk and related management methods, with a particular emphasis on the conditions of investment in energy infrastructure. The work consists of two main parts; the first one is the theoretical analysis of the issue, while the second discusses the application of analysis methods on the example of the investment in an agricultural biogas plant. The article presents the definitions related to the investment risk and its management, with a particular emphasis on the distinction between the risk and uncertainty. In addition, the main risk groups of the energy sector were subjected to an analysis. Then, the basic systematics and the division into particular risk groups were presented and the impact of the diversification of investments in the portfolio on the general level of risk was determined. The sources of uncertainty were discussed with particular attention to the categories of energy investments. The next part of the article presents risk mitigation methods that are part of the integrated risk management process and describes the basic methods supporting the quantification of the risk level and its effects – including the Monte Carlo (MC), Value at risk (VaR), and other methods. Finally, the paper presents the possible application of the methods presented in the theoretical part. The investment in agricultural biogas plant, due to the predictable operation accompanied by an extremely complicated and long-term investment process, was the subject of the analysis. An example of “large drawing analysis” was presented, followed by a Monte Carlo simulation and a VaR value determination. The presented study allows for determining the risk in the case of deviation of financial flows from the assumed values in particular periods and helps in determining the effects of such deviations. The conducted analysis indicates a low investment risk and suggests the ease of similar calculations for other investments.
Go to article

This page uses 'cookies'. Learn more