?To Attract Investors
The Ghana Chamber of Mines is calling for tax exemptions on exploration activities of mining companies or risk losing investments into the sector.
?Exploration involves high risk capital which attracts no profits but losses, therefore taxes placed on it renders it challenged and only scares away investors,? Sulemanu Koney, Chief Executive Officer (CEO) of the Chamber have stated.
The rules applicable to taxation on exploration and mining entities in Ghana include the payment of corporate tax rate which has been reviewed from 25% to 35%, royalty rate varied from a range of 3%-6% to a now flat rate of 5% and capital allowance regime revised from 80% in the first and 50% on the remaining balance for successive years to a flat rate of 20% over a five year period.
With exploration, taxes payable include employee tax, indirect tax and taxes paid by suppliers, too much taxes to be paid by an investor whose exploration spent dries down, are among issues that the CEO is worried about.
However, reforms in the mineral code of Burkina Faso have positioned that country significantly for exploration in Africa. Similarly, Cote D?Ivoire?s revised mining code has been hailed as the ?game changer? on the African continent. The country has overtaken Ghana in terms of green field projects.
An exploration permit holder is entitled to an exemption of payment of up to 50% of the registration fees for capital increase in a mining company as well as exemption of import duties including value added tax on import of materials, machinery and equipment for mining activities.
Senegal is also actively encouraging investments into its mining sector. In light of the competition from other countries, Ghana would have to reposition itself to maintain its pre-eminent position.
In the view of the CEO, taxes pose a great challenge hence Ghana in its current policy state is dashing all investment opportunities to countries where there are great incentives.
My Koney realized that because mining companies are seen as cash cows, government?s policy on the minerals sector tend to emphasize rent maximization rather than catalyst for industrial development.
Aside reducing the life of the mine, such policies also tend to crowd out the benefits of mining, a situation he noted placed a high fiscal burden on the companies.
He indicated at a day?s encounter with members of Journalist Business Advocacy (JBA) at a day?s workshop organized in collaboration with the Chamber that their expectation is to engage government to cut down on tax or do away with it because of its risky nature.
Sulemanu Koney, recommended that discussions on the mining sector be contextualized so as to realize the full revenue of the risk assumed by investors.
He was also of the view that government would adopt a life cycle and integrated approach to mining taxation-sliding scale fiscal law.
Vitus Ngaanuma, Community Relations Manager of Azumah Resources Limited, an exploration mining company reiterated the need for government to intervene in their tax payments since they make no profits.
He indicated that things to look out for before investing includes cost of productions and the legal inducements adding that Ghana?s current situation is not attractive.
According to him, a reform in the mining code of surrounding countries put Ghana at a competitive disadvantage which is at the detriment to the companies involved in exploration and the country at large.
??because when a company collapses, it isn?t only the investor that loses, the country loses as well,?, he added.
Studies he said reveals that one out of ten exploration companies make it to the production stage making it necessary for a tax holiday to be granted them for such monies to be re-invested into the mineral search.
Mr. Ngaanuma called for an amendment in section 34 of the Mineral and Mining code 2006, Act 703 to extend the present permit period from 3 years to 4 as has been the case in neighboring countries.
This he believes would entice more investors in the country and also compete other African countries with inviting motivations for mining companies.
Currently, exploration companies with the Ghana Chamber of Mines are Azumah Resources Ltd, Birim Goldfields Ltd, Resolute Ghana Ltd, Mensin Gold Mining Ltd and Pelangio Ahafo Ltd.
Source: Paa Kwesi Agyefi ,spynewsagency.com