Taxation of mining industries

Understanding the sharing of the mineral resource rent between States and investors

Introduction

The Ferdi provides the first legal and tax database that lists the tax regime applicable to industrial gold mines in 22 African producing countries since the 1980s and a simulation tool for sharing the mineral resource rent between State and investors.

The tools provided make it possible to: 1) understand the characteristics of the mining taxation, 2) know the evolution of the mining taxation, 3) compare the mining taxation between African countries, 4) compare mining taxation between projects of the same country, 5) assess the sharing of the mineral resource rent between State and investors.

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Credits

This site has been developed by the Ferdi from a database built in partnership with the ICTD and the Cerdi.
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Accessing an innovative database

Improving the mobilisation of domestic resources is a hight priority for African countries. The heavy dependence of these countries on the extractives industries implies understanding the mechanisms and consequences of the mining tax Regim applied in Africa on the development of the extractive industry as well as the public revenu collection.

Although several international institutions, non-governmental organisations and universities publish on this issue, data on mining tax Regim in Africa remains difficult to access. Thus, improving the transparency of information in the African mining sector has become a priority for the international community.

The database provided has three major innovations:

  • An inventory of the 12 main taxes and duties (rates, bases, exemptions) that are due during the prospecting and mining phases of a mining project;
  • An unprecedented historical depth;
  • The link between each piece of tax information and its legal source.

The database now concerns 14 French-speaking countries, 7 English-speaking countries and 1 portuguese-speaking country: Angola, Benin, Burkina Faso, Cameroon, Chad, Republic of the Congo, Democratic Republic of the Congo, Cote d’Ivoire, Gabon, Ghana, Guinea, Kenya, Madagascar, Mali, Mauritania, Niger, Nigeria, Senegal, Sierra Leone, South Africa, Tanzania and Zimbabwe.

The database currently focuses on gold, that is exploited in 34 of the 54 African countries, making it the second larger producer in the world.

The information provided here is intended for researchers, States and public administrations, international institutions and all national and international stakeholders. The objective is to contribute to the improvement of public policies and the information of companies, with a goal of international development.

Full access to the legal and tax data of the website requires a subscription. The subscription is free for individuals or institutions that commit to make no commercial use. On the other hand, financial participation is requested from individuals or companies wishing to use the data for commercial purposes.

Comparing the share of the mineral resource rent that goes to the State

States have to arbitrate between the will to attract foreign investors and the need to increase public revenues. Applied to the economic data of a representative mine and associated with a cash flow model, this database offers the means for researchers and analysts to summarize the tax burden that should apply to mining companies in the African countries according to the legislation. The indicator calculated is the average effective tax rate (AETR), that represents the share of the mineral resource rent captured by the State on a mining project.

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A very high AETR, near 100% or higher, should not be too strictly interpreted. It does not mean that the State manages to collect all of the rent; rather it means that the tax burden makes the mine economically unviable. This illustrates the significant impact of the tax system and the gold price on the profitability of a mining project.

Studying the evolution of the share of the mineral resource rent that goes to the State

The unprecedented historical depth of this database makes it possible to follow the evolution of the average effective tax rates since the 1990s in 21 African countries. This history shows the impact of the successive tax reforms decided by African States (rates, bases, calculation rules) to try to adapt to a context of instability of world prices.

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Medias et news

Update 2020: Cameroon, Congo and DRC

2021-04-20

Updated tax data for 2020 are now available for Cameroon, the Republic of Congo and the Democratic Republic of Congo.
In Cameroon, deferred depreciation must now be carried forward before 10 years. In the Republic of Congo, the Finance Act, 2020 (Act No. 42 of 2019) and the Finance Amendment Act, 2020 (Act No. 23 of 2020) make two important changes in 2020. Firstly, the corporate income tax rate is reduced from 30% to 28%. Secondly, the tax on negative externalities of mining and hydrocarbon extraction activities, introduced in 2012, is repealed. In the Democratic Republic of Congo, taxation has not changed (Finance Act No. 19 of 2019).

Congolese corporate income tax: standard rate decreases

2021-04-19

In the Republic of Congo, the standard rate of corporate income tax (CIT) has decreased steadily over the last decade. It was set at 36% in 2010, 35% in 2011, 34% in 2012, 33% in 2013, before stabilising at 30% in 2014. The Finance Amendment Act, 2020 (Act No. 23 of 2020) marks a new decrease. The corporate tax rate is now 28%.
However, this reduction does not concern all extractive industries. Mining companies remain subject to the 30% rate, in force since the Mining Act, 2005 (Act No. 4 of 2005), while oil companies may be subject to a higher rate in their petroleum agreement.

Congolese negative externalities tax: repeal eight years after its creation

2021-04-18

In the Republic of Congo, the Finance Act, 2012 (Act No. 36 of 2011) had introduced in 2012 a “tax on the negative externalities of mining and hydrocarbon extraction activities”, known as a “pollution tax”. Situated in sections 171-P1 and following of the General Tax Code, volume 1, this tax amounted to 0.2% of the turnover of mining and oil companies in the production phase. It was levied for the benefit of the central State (60%) and local authorities (40%). It was not a deductible charge from the corporate income tax base. It was repealed in 2020 by the Finance Act, 2020 (Act No. 42 of 2019) and the Finance Amendment Act, 2020 (Act No. 23 of 2020).

Mining taxation in Africa: what recent evolution in 2018?

2020-03-26
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Tax convergence in the mining sector of WAEMU countries

2019-02-21
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