Royalties are on gross sales - not after expensesNovember 13 2011 at 10:04 AM
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|Em Nau |
Response to Re: Western fued
Obviously you do not know how royalties work in the enclave sector, allow me to explain: as soon as a shipment of oil or minerals leaves the dock, the royalties are deducted based on the FOB invoice value.
This means that before any costs are deducted from the invoice, the royalties are paid first, royalties are in fact the first cost levied against the shipment. This way, the profitability of the business does not affect the earnings of the traditional landowners.
As I tried to say in my initial contribution, there is nothing wrong with the practice so long as the rationale is correct.
Bear in mind that it is actually cheaper to serve foreign food in the messes than local food because most of the foreign food served in the messess are actually mass produced in a factory somewhere so the unit costs are lower, the preparation time is less and it only needs to be thawed, heated, then served.
PNG food is expensive to buy in comparison, needs lots of preparation time and cooking takes longer so it is actually more expensive. How do I know? I used to calculate royalties after shipment and I was also (in another job) required to pay the catering firm for meals supplied. The local food was charged much higher then the western food.