Mineral tax will live shorter. On top of that tax revenues for the government would be low, too. That leads to a Laffer curve-shaped function of tax revenue for the government, in which the “optimal level of taxation” is somewhere in the middle. Any mineral tax must be neutral. Neutral is defined as maintaining incentives for investors to exploit minerals. Therefore, the revenues must exceed the costs. Furthermore, the government must be able to rely on the amount of tax money it receives, therefore, the tax imposed must be as certain and as steady as possible. Often, governments decide to use a
Notional profit Notional profit Notional Profit A contract usually takes several years to get itself completed. If the profit on such contracts is recorded only after their completion, then wide fluctuations may be noted in the profit figures of contractors from year to year. To avoid these fluctuations in the reported profits and to reflect the revenue in the accounting period during which the activity is undertaken, the profit in respect of each contract in progress is transferred to the profit and loss account of the year by calculating the notional profit. The portion of notional profit to be transferred to the