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GH¢175m expected from new mining tax
 
Posted on: 27-Jul-2012         Source: thebftonline.com
 
 
 
Government expects to generate additional tax revenue of GH¢175million from the mining sector, following changes to the mining tax regime, Dr. Kwabena Duffuor, Minister of Finance and Economic Planning, has disclosed.

“Corporate tax on mining was increased from 25 percent to 35 percent in the 2012 Budget, and a uniform regime for capital allowance of 20 percent for five years was also announced. These measures are expected to generate additional revenue of GH¢175million.


“In January this year, government established a National Mining Re-Negotiation Committee to critically review the mining sector’s fiscal regime and existing mining agreements with the view to ensuring that the country obtains its fair share of the gains from the mining sector.


“Fees and other charges related to the granting of stability agreements were expected to generate some GH¢525million as revenue to the government,” Dr. Duffuor said in Accra.


Government in its 2012 budget statement announced that the corporate tax rate for miners is being increased from the current 25% to 35%, while a windfall profit tax of 10% will also be imposed.


The proposals in the 2012 budget include -- in addition to the hikes in corporate and windfall taxes -- the reduction in capital allowance tax from 80% to 20% for a period of five years for all mining companies, as in the case of the oil and gas sector.


The announcement of new mining and mineral taxes was received with mixed reactions; sector operators describing them as too high and having the potential to impede future investments in the sector.


Dr. Toni Aubynn, CEO Ghana Chamber of Mines, told B&FT: “Uncertainties must be looked at carefully. The new reforms could deter the mining companies from making further investments in the sector.”


A study conducted by PricewaterhouseCoopers (PwC) and sponsored by the Ghana Chamber of Mines to assess the industry’s contribution to the economy revealed that the country received US$301million in taxes from nine mining companies which took part in the study.


Of the amount, US$121million consisted of profit-taxes and US$113million of mining-specific taxes including royalties. The figures are a measure of the cash-taxes paid by the mining companies, covering both taxes borne and taxes collected.


The report said the total tax contribution made by the nine companies was 9.6 percent of government’s total tax revenue in 2010.


In 2010, total employment taxes borne and collected by mining companies on behalf of employees averaged US$4,200 for each employee -- with the study noting that this figure is higher than the country’s per capita income of US$1,370.


The Chamber of Mines revealed that total investment inflows into the mining sector increased from US$770million in 2010 to US$780million in 2011, while the total mineral revenue of producing member-companies of the Chamber rose from US$3.7billion in 2010 to US$4.8billion in 2011 -- an increase of 28%.


By Ekow Essabra-Mensah