Ontario Offers Deductions for 13% De Beers Victor Project Tax

The De Beers Victor project in Ontario will have some deductions to soften the 13 percent diamond royalty tax that Ontario’s provincial government recently announced it would be imposing on the mine.

In a statement released by the government Thursday, the tax system is described as now including “unique, made-in-Ontario deductions that support the expansion of Ontario’s developing diamond industry.”

The deductions include 100 percent of the money it expends in agreements with First Nations communities and 100 percent of ‘qualifying donations’ to charities, education and other donations of a ‘benevolent nature.’

The tax, which applies to mines posting more than a $281 million net profit, was announced three months ago and meant that De Beers had to pay 13 percent tax on the mine’s net profit to the Ministry of Finance, more than twice as much as every other mine in the province, which pay a 5 percent tax.

With the new deductions in place, they will end up paying close to 10.4 percent.

De Beers Victor project spokesman Tom Ormsby said that De Beers started planning the Victor project two years ago with the five-per-cent Northern Ontario mining tax in mind, so doubling that tax makes a considerable difference to fiscal projections for the mine and brings its viability into question.