Mining in Africa: Tax Regimes and Companies Profits

 THIS POST WAS ORIGINALLY PUBLISHED MARCH 27, 2009

Mining in Africa: Tax Regimes and Companies Profits

 A group of African and international non-governmental organizations collaborated in making  a study – “Breaking The Curse” –  on mining taxation and transparency in seven African countries. The countries are Ghana, Tanzania, Sierra Leone, Zambia, Malawi, South Africa, and the Democratic Republic of Congo (DRC). Each country study examined past and present mining tax laws, tax rates, and the forces driving tax changes, and compared the tax terms of mining contracts with national tax laws. 

The companies that participated in the report are: Open Society Institute of Southern Africa, Johannesburg; Third World Network Africa, Accra; Tax Justice Network Africa, Nairobi; Action Aid International, Johannesburg; Christian Aid, London. 

The pamphlet makes an analysis of tax regimes in the countries, as well as some recommendations as to how increase revenue and transparency in mining. Of practical value for investors and mining professionals are the tables, provided

The report discusses transparent reporting by the companies The Extractive Industries Transparency Initiative (EITI) initiated by the UK government in 2002 as well as IFRS requirements.
The EITI is about the following:

EITI company reporting template

The EITI requires mining companies to report publicly the following information for each financial year. The details of the information are to be negotiated with companies in each country, depending on the national tax law and other considerations:

I Revenue and profit for each concession or license

– Total production by value and quantity.

– Total sales by value and quantity.

II Taxes and fees paid to the state

a) Taxes paid: corporate income tax, VAT refunds deducted, Customs duties, Windfall taxes, Real estate taxes, Excise taxes, Fuel levies, Vehicle taxes, Taxes on dividends paid, Taxes on interest paid, other

b) Royalties paid

c) Fees paid: exploration, license, land rent, mineral resource use, other

c) Charges: stamp duties, other

d) Dividends

e) Other: donations to government, community expenditure

III Sum of discounted taxes

Capital expenditure, staff development expenditure, exploration costs, environmental fund

Contributions

Interesting to note that earlier this month the Government of Indonesia has announced its intention to work towards EITI compliance and to make an application to become an EITI candidate.  

Thus, this is another good add-on to professional mining bookshelf….

It can be downloaded HERE