A tax expert suggests government and the Chamber of Mines should consider a windfall tax for mining companies.

 

A windfall tax on profits means that if a mining company makes good profit in the year government receives more returns.

 

PwC Corporate and International Tax Partner Stefan Hugo says introducing a two percent export levy on mining companies would mean that they would pay tax on their minerals exported outside the country on top of the corporate tax and royalties they also pay to government.

 

 

Last year, the Minister of Finance introduced an export levy of five-percent to mining companies.

At that point this was not well received by the Chamber of Mines, but after various consultations with the Finance Ministry and Chamber, the Ministry dropped plans to increase corporate tax rate for mines and mineral export levies last August.

 

Now the Finance Ministry has decided to re-introduce the export levy at 2 percent and has given the Chamber of Mines two weeks to respond.

 

PwC Corporate and International Tax Partner Stefan Hugo explains what this would mean to the mining industry.

 

At the moment diamond mining companies have to pay a 55 percent corporate tax while non-diamond mining companies pay a 37 comma five percent corporate tax plus royalties. 

 

The Chamber says they already see this as a burden to the mining company's profits. The Finance Ministry and the Chamber of Mines are now in consultation on how best to resolve this matter.

 

The mining industry pays 11 comma three billion dollars in mining taxes annually