UPDATE 1-S.Africa tweaks royalty tax in final mine bill
Tue Jun 3, 2008 9:47am EDT
reuters.com
(Adds no comment from Chamber of Mines, background)
JOHANNESBURG, June 3 (Reuters) - South Africa, the world's top producer of precious metals, said on Tuesday it had revised a mining royalty bill to charge royalty based on profitability after miners said the previous tax could hurt investment.
The final formula would be based on earnings before interest and tax (EBIT), with 100 percent capital expensing, instead of EBITDA (earnings before interest, tax, depreciation and amortisation) as was the case in the previous draft of the bill.
"Based on the comments received the formulae were adjusted to take into account the capital intensive nature of certain mining operations, especially gold mining and oil and gas," the South African Treasury said in a statement.
Mining companies, spearheaded by the Chamber of Mines, have said the draft Mineral and Petroleum Resources Royalty Bill would hit output and make the industry less competitive at a time when a power shortage has hurt the sector.
A Chamber of Mine official said the organisation could not yet comment on the latest revisions to the bill.
Under the new calculation, the Treasury said it would cap the rate charged for refined minerals, oil and gas at 5 percent and for unrefined minerals at 7 percent.
"The revised royalty regime is investor friendly, and should be relatively easy to comply with and easy to administer, whilst it should also ensure that the fiscus receives its fair share of tax revenue," it said.
The Chamber of Mines had said the way the formula had been structured would mean companies would pay a fair amount more in royalties compared to the original fixed rates for a number of commodities.
The final draft bill will be tabled in parliament on June 24 after comments from the public and is due to become law in May, 2009.
(Reporting by Emelia Sithole-Matarise; editing by Christopher Johnson) |
