Taxation of mining industries

News

Update 2017 and 2018: Kenya, Nigeria and Sierra Leone

2019-09-03

Updated tax data for 2017 and 2018 are now available for Kenya, Nigeria and Sierra Leone.
In Kenya, a new Mining Act was adopted in 2016 (Act No. 12 of 2016) and supplemented by 14 regulations in 2017. In Nigeria, mining taxation has not changed. In Sierra Leone, an Extractive Industries Revenue Act was passed in 2018. It reviews both mining and oil taxation.

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New Kenyan Mining Act: what changes?

2019-09-02

Kenya adopted a new Mining Act in 2016 (Act No. 12 of 2016), supplemented by 14 regulations in 2017. However, there is only one important change to note because most of the mining tax provisions are located in the Income Tax Act. The State now requires a free participation of 10% in the capital of industrial mining companies. This measure therefore increases the tax burden applicable to gold mining companies. For a representative medium grade mine (3g/t) and a gold price of $1250/oz, the average effective tax rate (AETR) increases from 41% to 48%.

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Sierra Leonean Extractive Industries Revenue Act: introduction of a mineral resource rent tax and a stability clause

2019-09-01

Sierra Leone adopted the Extractive Industries Revenue Act, 2018. It reviews both the country's mining and oil taxation. Concerning mines, the mining royalty is increased to 8% for high-value gemstones. Loss carry forward is more flexible. A mineral resource rent tax and a stability clause are inserted. However, the tax burden applicable to gold mining companies remains stable. For a representative medium grade mine (3g/t) and a gold price of $1250/oz, the average effective tax rate (AETR) remains at 55%.

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Update 2017 and 2018: Ghana, Mali and Niger

2019-07-23

Updated tax data for 2017 and 2018 are now available for Ghana, Mali and Niger.
In Ghana, the VAT rate was reduced from 15% to 12.5% in 2018 (Act 970). However, this reduction in the nominal rate hides an increase in the effective rate from 17.5% to 18.125%, including 5 "non-deductible" points. In Mali, the special tax rates on certain products (ISCP) were revised in 2018 (Decree No. 2018-0323/P-RM of 30 March 2018) without however changing the 5% rate applicable to gold bullion. In Niger, fixed fees were also revised in 2017 (Act No. 2016-43 of 6 December 2016).

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Ghanaian value added tax: decrease in the nominal rate but increase in the effective rate?

2019-07-22

In Ghana, the VAT rate was reduced from 15% to 12.5% in 2018 (Act 970). However, this reduction in the nominal rate hides an increase in the effective rate from 17.5% to 18.125%, including 5 "non-deductible" points.
Indeed, the National Health Insurance Levy of 2.5% and the Education Trust Fund Levy of 2.5% are excluded from the VAT imputation mechanism. As the new VAT rate of 12.5% is applied after these two levies, goods and services are now taxed at 18.125%: [1 + (2.5% + 2.5%)] x [1 + 12.5%] = [1 + 18.125%].

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