NWT_Tax_Benchmarking_Report_Oct_23.pdf

PricewaterhouseCoopers LLP (“PwC,” “we,” or “us”) was engaged by the Government of the Northwest Territories (GNWT) to assess the tax and royalty competitiveness of its minerals sector. To do so, we have assessed taxes and royalties paid over the life of mine (LOM) for two representative mines: a base metal mine with initial capital investment of $400 million and a large diamond mine with initial capital investment of $1.2 billion. For each representative mine, we have compared the Northwest Territories with 21 other jurisdictions (“the comparison jurisdictions”).

Our analysis is separated into three phases:

Phase 1 includes comparison of mining taxes and royalties between the Northwest Territories and the comparison jurisdictions (collectively referred to as “direct taxes”). This phase provides an update of a similar study conducted in 2007/8 (“the Two Ducks Report”) by Two Ducks Resources to allow comparison over time. Phase 2 adds to Phase 1 to include payroll taxes, property taxes, fuel taxes, and carbon taxes (collectively referred to as “indirect taxes”). Phase 3 provides a comparison of total after-tax costs for the Northwest Territories and six other jurisdictions, taking into account underlying differences in costs of mine development and operation in those jurisdictions. The six jurisdictions are Alaska, British Columbia, Quebec, Saskatchewan, South Africa, and Western Australia, which were selected by GNWT based on the findings of Phase 1 and Phase 2.

We then present an assessment of whether the Northwest Territories is receiving a fair return on its mineral resources by comparing the division of cash flows between mining companies and governments and taking into account economic alternatives.