Hi,
I am wondering if anyone has experience of concession contracts, in particular on the use of natural resource deposits, in terms of how they are valued and whether they can be amortized over the life of the concession.
To explain where this is coming from:
My thinking is that the value of the concession contract to the concessionaire is above the value of the royalties the concessionaire has to pay to the grantor. I would like to calculate this extra value of the concession contract and amortize it in order to reduce the taxable income. It is obvious that I do not want to calculate the value of the concession contract as the cost of the total investment in developing the concession area for commercial use because already I can capitalize most if not all of these costs and depreciate them to reduce taxable income. Therefore, in my ideal world, the value of the concession contract would come on top of the total cost of developing the concession area for use (e.g. construction etc.) and hence I would end up with higher capitalized assets, higher depreciation charges, and lower taxable income. Anyone know of this being possible in any jurisdiction they have heard of?
Many thanks,
L.
I am wondering if anyone has experience of concession contracts, in particular on the use of natural resource deposits, in terms of how they are valued and whether they can be amortized over the life of the concession.
To explain where this is coming from:
My thinking is that the value of the concession contract to the concessionaire is above the value of the royalties the concessionaire has to pay to the grantor. I would like to calculate this extra value of the concession contract and amortize it in order to reduce the taxable income. It is obvious that I do not want to calculate the value of the concession contract as the cost of the total investment in developing the concession area for commercial use because already I can capitalize most if not all of these costs and depreciate them to reduce taxable income. Therefore, in my ideal world, the value of the concession contract would come on top of the total cost of developing the concession area for use (e.g. construction etc.) and hence I would end up with higher capitalized assets, higher depreciation charges, and lower taxable income. Anyone know of this being possible in any jurisdiction they have heard of?
Many thanks,
L.