Foreign mining companies operating in the United States are subject to state and local 
indirect tax regimes and federal and state income tax regimes.

State and local indirect tax regimes may include severance 
tax, sales and use tax, property tax, customs duties, or 
other indirect taxes as outlined in the specific jurisdiction’s 
regulations. Certain states and municipalities exempt 
equipment used in the mining process from sales and use 
taxes in their jurisdiction. Customs duties assessed on 
imported materials and capital can vary greatly, depending on 
the product and the country of origin.

Although the income tax rules in the separate state tax 
jurisdictions mirror federal income tax rules, each state has 
separate tax rules and regulations, including rules specific to 
mining operations in its jurisdiction. The combined federal and 
state income tax rate is in the range of 38% to 40% (state 
taxes are deductible in computing federal taxes). For income 
tax purposes, the deductibility of various costs incurred during 
the mining process varies, depending on the state in which 
the costs are incurred. 

The federal tax rules are contained in the Internal Revenue 
Code (IRC) and related Treasury regulations. The federal tax 
law is administered by the Internal Revenue Service (IRS). 
Like the CRA, the IRS issues guidance and rulings on a variety 
of matters relating to the interpretation and application of 
the tax law.

Under the IRC, US citizens and residents are taxed on a 
worldwide basis. Non-residents are taxed on income derived 
from US sources, including income derived from carrying on a 
trade or business in the United States. The tax treatment under 
US domestic law may be varied by an applicable tax treaty.

For federal tax reporting purposes, members of a corporate 
group can elect to file on a consolidated basis. Consolidation 
permits the aggregation of the earnings and losses of group 
members in calculating US tax payable, subject to certain 
limitations. 

Overview of the 
US Mining Tax Environment

© 2013 KPMG LLP, a Canadian limited liability partnership and a member firm of the KPMG network of independent member firms 
affiliated with KPMG International Cooperative (“KPMG International”), a Swiss entity. All rights reserved.

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 A Guide to Canadian Mining Taxation