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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Video presentation

Credits

This site has been developed by the Ferdi from a database built in partnership with the ICTD and the Cerdi.
Picture by Photo JB Dodane

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 2019: Burkina Faso, DRC and Niger

2020-06-19

Updated tax data for 2019 are now available for Burkina Faso, the Democratic Republic of the Congo and Niger.
In Burkina Faso, mining taxation has not changed (Act No. 042/2018/AN of 18 December 2018). In the Democratic Republic of the Congo, the normal rate of corporate income tax was reduced to 30% (Finance Act No. 18/025 of 13 December 2018) and a new order setting the rates of duties, taxes and royalties to be collected at the initiative of the Ministry of Mines was issued (Inter-ministerial Order No. 0001/CAB.MIN/MINES/01/2019 and No. CAB/MIN/FINANCES/2019/009 of 22 February 2019). In Niger, the derogatory tax measures present in the sectoral laws were brought together in the tax code by the Finance Act, 2019 (Act No. 2018-79 of 17 December 2018).

Nigerien Finance Act: Gathering of sectoral provisions in the tax code

2020-06-18

In Niger, section 11 of the Finance Act, 2019 (Act No. 2018-79 of 17 December 2018) creates a Title VIII in the First Book of the General Tax Code (Act No. 2012-37 of 20 June 2012). This Title VIII aims to bring together in the tax code all the derogatory tax provisions present in the sector laws: Investment Act (Act No. 2014-09 of 16 April 2014), Petroleum Act (Act No. 2017-63 of 14 August 2017), Mining Act (Ordinance n°93-16 of 2 March 1993), derogatory advantages for investments in major mining projects (Act No. 2008-30 of 3 July 2008), etc. A similar approach was taken in Senegal in 2012 with the introduction of a new general tax code (Act No. 2012-31 of 31 December 2012 and Act No. 2012-32 of 31 December 2012).

Congolese corporate income tax: reduction of the normal rate

2020-06-17

In the Democratic Republic of the Congo, corporate income tax is levied on the profits of legal entities and individuals. Its rate was set at 35% since 2012 (Section 1 of Ordinance-Act No. 004/2012 of 21 September 2012 amending Section 83 of Ordinance-Act No. 69/009 of 10 February 1969). It was reduced to 30% by the Finance Act, 2019 (Section 17 of the Finance Act No. 18/025 of 13 December 2018). However, this reduction does not affect mining companies that already benefited from the 30% rate in the Mining Act (Section 9 of Act No. 18/001 of 9 March 2018 amending Section 247 of Act No. 007/2002 of 11 July 2002).

Mining taxation in Africa: what recent evolution in 2018?

2020-03-26
Summary brief

Mining taxation in Africa: what recent evolution in 2018?

2019-12-12
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