Ghana government to reduce taxes if world gold price falls – Larbi-Siaw
In response to the complaints of mining companies in Ghana over the increase in mining taxes, the government of Ghana has strongly indicated that, it is prepared to reduce taxes on mining if world gold price falls.
Speaking exclusively to ghanabusinessnews.com at the 3rd Mining for Development Forum organised by the Ghana Chamber of Mines in Accra, a Tax Policy Advisor at the Ministry of Finance, Dr. Edward Larbi-Siaw says, “if gold prices come down so low that companies don’t make any profit, the tax rate becomes irrelevant. They will pay no tax at all. And in addition we will allow them to carry forward the losses they’ve made against future profit continuously for five years. This is how government responds to the market.”
The Forum was under the theme “Challenges to the state’s receipts from mining: When enough is not enough.”
“In the 1990s when gold prices fell to about $400 -$500 per ounce, many companies did not pay tax. But now that the prices are more than $1500, and we believe cost of production hasn’t gone up that much that is why we have raised the corporate tax rate and we are trying even going to raise the windfall profit tax.”
But the Chief Executive Officer of the Ghana Chamber of Mines, Dr. Tony Aubyn is not happy with the surprise announcement of increment in taxes and has called for more dialogue before taxes are increased. “The chamber is not afraid of taxes,” he however said.
According to him, the mining sector is the number one tax payer and highest contributor to the Ghana Revenue Authority’s (GRA) Domestic Collections and has contributed about GH¢1.46 billion to the GRA representing 27.04% of Total Direct Taxes in 2012.
The mining sector has also paid GH¢893.77 million in corporate tax representing 36.98% of the total company tax collected in 2012.
“The mining industry continues as the leading attractor of foreign direct investment (FDI) and has employed over 21,239 people directly of which 334 representing 2% are expatriates,” he said.
The natural resources which include oil, gas and mining, which is gold, diamond and manganese was reclassified – that resulted in the increment of corporate tax from 25% to 35%. Capital allowance was also increased to a straight line of 20% for five years.
Dr. Larbi-Siaw believes that, the mining companies’ worry is about the windfall profit tax but “we tell them that if you don’t make windfall profit you don’t pay windfall profit tax. We will not collect more than enough,” he assured.
On stability agreements with some mining companies, he said there is a committee working on reviewing all stability agreements to ensure equity in the mining sector.
On his part, the Chief Executive Officer of the Minerals Commission, Mr. Ben Aryee believes that the focus of government should be on the long term effects and benefits of mining. He however advised that, communities where gold are mined should be involved in the fight against illegal mining popularly referred to as ‘galamsey’.
By Pascal Kelvin Kudiabor