Gold Fields claims unfair playing field in payment of Ghana taxes among miners

The world’s fourth-largest gold producer, Gold Fields is unhappy with the Ghana government over what it describes as the unfair level grounds in the payment of taxes and royalties.

According to the Johannesburg-based miner, it pays more taxes and royalties than any of the major mining firms in Ghana.

Gold Fields is complaining that beginning 2012, the Ghana government wants to raise the corporate tax on mining from 25% to 35% as well as introduce a windfall profit tax of 10% despite the company’s stability agreement with government.

“There isn’t a level playing field on taxes and royalties. We are paying higher royalties than the other major producers in that country. That’s not sustainable,” Chief Executive Officer Nick Holland told to investors December 5, 2011, according to a Reuters report.

“And we will be subject to these taxes despite the fact that we have had a stability agreement in draft form with the government for many years. So that’s also not sustainable. There has to be a level playing field created, Mr Holland was quoted as saying.

But the CEO disclosed that the miner is in talks with government about the proposed tax hikes and negotiations so far have been promising.

Earlier, Gold Fields said it is yet to advise shareholders over the proposed Ghana mining tax increment.

“We require more details of the proposed tax changes to further assess their potential impact. Accordingly Gold Fields is not yet in a position to advise shareholders on implications for the Company,” said Gold Fields in a brief note on its website November 18, 2011.

Already, the Ghana Chamber of Mines has stated that government’s proposal to increase the mining taxes will lead to low investments in the sector.

“It will not encourage investments…lead to cost of production. These are business entities and they operate on demand and supply,” Dr Toni Aubynn told ghanabusinessnews.com exclusively on phone November 17, 2011.

By Ekow Quandzie