PotashCorpâ€™s Annual Report: The Fine Print
Those interested in public revenues should see pages 109, 110 and 111. Note 19â€™s breakdown of â€œProvincial Mining and Other Taxesâ€ confirms something that I had suspected.
PotashCorp paid zero Potash Production Tax in 2010. In other words, the company is swimming in writeoffs and had no taxable profits according to Saskatchewanâ€™s profit-tax formula.
The companyâ€™s entire $77-million royalty payment was the provincial resource surcharge, set at 3% of sales. (Of course, 3% of potash sales is closer to 5% of potash gross margin).
Thank goodness Saskatchewan kept the resource surcharge when it eliminated its corporate capital tax. Otherwise, PotashCorpâ€™s 2010 royalty payment would have been a big goose egg (and not of the golden variety).
Note 21 breaks down corporate income tax by country. While the report does not distinguish between federal and provincial income tax, the 30% â€œfederal and provincial statutory income tax rateâ€ clearly comprises the 18% federal rate plus the 12% Saskatchewan rate.
So, we can infer that PotashCorpâ€™s 2010 Canadian income tax expense of $333 million comprises about $200 million to Ottawa and $133 million to provincial governments. Because the company also operates in other provinces, Saskatchewan is probably getting less than $133 million.
Meanwhile, PotashCorp is paying $113 million of corporate income tax in Trinidad, where it has a nitrogen facility. In the previous year, 2009, it actually paid more corporate tax to Trinidad than to all levels of Canadian government!
Congratulations, Trinidad, for collecting a decent amount of revenue from PotashCorp. Canadaâ€™s federal and provincial authorities need to pull up their socks.