Bawdwin will be Myanmar’s most lucrative mine when it starts operations early next year. By 2023, it will be one of the world’s top producers of silver and lead.

Profits to the Bawdwin Joint Venture (BJV) consortium will likely reach US$1.1 billion.

Despite this projected windfall, BJV, consisting of Perth-based Myanmar Metals, Win Myint Mo Industries and East Asia Power, is applying to the Myanmar authorities for a seven-year corporation tax holiday worth an estimated $163m.

That is enough to pay for more than 109,000 Myanmar primary school teachers’ salaries for a year.

With journalists at Myanmar Now, we were able to view a report by respected Berlin-based extractive contract modelling experts Open Oil. It had analysed Bawdwin’s future costs and revenues and put the size of a potential tax holiday at $163m.

Then, working with journalists at Myanmar Now, we confirmed that the Bawdwin consortium is intending to apply to the Myanmar authorities for the tax holiday even though the project is set to generate them enormous profits.

Myanmar Metals argues the tax holiday is needed because Bawdwin, located in a conflict-torn state, is a risky investment. Not paying corporation tax for seven years will make it easier to improve the local economy, it says.

TAX HOLIDAYS

But tax holidays are facing increased scrutiny around the world.

Many say they are too generous and cause countries to lose out on large sums of money that could be used to improve peoples’ lives.

A 2018 study by the Organisation for Economic Co-operation and Development (OECD) concluded that tax holidays are an “inefficient and ineffective incentive for mining” and said they can encourage abusive corporate behaviour.

Without a tax holiday, Myanmar Metals’ projected profit at Bawdwin would still be high enough to justify its investment, according to OpenOil’s analysis.

Investors would earn a 36% return with the tax holiday and over 30% without it. Both figures are well above the minimal rates investors usually accept for putting their money into such a project, according to OpenOil.

A decision on whether to grant Bawdwin the tax break is expected later this year.

The decision rests with the Myanmar Investment Commission, which says the consortium still needs to apply for permission to develop the project.

Read more about the Bawdwin tax holiday in Myanmar Now hereYou can read the draft Open Oil report into Bawdwin mine here

Picture: Kan Thar/ RFA/Myanmar Now