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INCOME TAXES:
 3 Months Ended
Mar. 31, 2013
INCOME TAXES:  
INCOME TAXES:

NOTE 4 — INCOME TAXES:

 

The income tax provision and the effective income tax rate for the first quarter 2013 and 2012 were as follows ($ in millions):

 

 

 

2013

 

2012

 

Income tax provision

 

$

234.9

 

$

318.8

 

Effective income tax rate

 

32.5

%

33.9

%

 

These provisions include income taxes for Peru, Mexico and the United States.  The decrease in the effective tax rate for the first quarter of 2013 from the same period in the prior year is primarily due to a reduction in taxes allocated to the current quarter caused by a one-time net tax benefit discrete to this quarter.

 

For United States federal income tax reporting the operating results of SCC are included in the Americas Mining Corporation (“AMC”) U.S. federal income tax return.  In accordance with paragraph 30-27 of ASC 740-10-30, current and deferred taxes are allocated to members of the AMC group as if each were a separate taxpayer.  SCC provides current and deferred income taxes as if it was a separate taxpayer.

 

Special Mining tax

 

In September 2011, the Peruvian government enacted a tax for the mining industry.  This tax is based on operating income and its rate ranges from 2% to 8.4%. It begins at 2% for operating income margin up to 10% and increases by 0.4% of operating income for each additional 5% of operating income until 85% of operating income is reached.  The Company has accrued $15.5 million and $11.9 million of special mining tax as part of the income tax provision for the first quarter 2013 and 2012, respectively.