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Small-scale miners to pay 10% withholding tax

  • SOURCE: | Editor
  • MININGIt has become compulsory for purchasers of unprocessed minerals from unlicenced, small-scale and artisanal miners to pay a 10 percent withholding tax (WHT), in a move that could spur revenue growth the revised Income Tax Act, 2015, (Act 896), has stipulated.

    The new WHT on the purchase of unprocessed minerals is in line with efforts by government to broaden the tax base. Earnings from the 10 percent tax should compensate losses the country currently incurs through their operations as a result of non-payment of royalties and other tax revenues.

    A Deputy Commissioner at the Domestic Tax Revenue Division (DTRD) of the Ghana Revenue Authority, Mr. Edward Gyambrah, speaking at a media interaction in Accra explained that before the new act’s introduction, activities of artisanal and illegal miners paid no taxes except for value added tax (VAT) on their inputs.

    Government is aiming at taking part of the growing pie in the small-scale, artisanal and illegal mining business, which accounted for 34 percent representing approximately 1.6 million ounces of national gold output in 2014.

    In 2014, the country’s gold output fell by 17 percent to 3.16 million ounces about US$3.18billion on account of lower production in all the major mining companies except those in the operations of small-scale, artisanal and unlicenced operators.

    It is estimated that about GH¢500million is lost annually in taxes and royalties to these artisanal, small-scale and unlicenced gold miners.

    A Tax Policy Advisor at the Ministry of Finance, Dr. Edward Larbi-Siaw, disagreed with concerns that the disorganised nature of operators in that bracket will render the new tax ineffective, explaining that measures are in place to help get every operator in that segment to comply.

    “Because they are difficult to reach, we are saying that when buyers buy their products, they should withhold; and that is the only way we can get them to also contribute to revenues,” he said.

    Their products are mostly sold to the licenced gold buyers and the Precious Minerals Marketing Company (PMMC).

    Dr. Larbi-Siaw said government is now hoping to reverse that trend by first getting them to contribute to national revenues.

    “If you look at the way they are degrading the environment, dirtying the water and things like that, the only way we can benefit from them is to let them contribute small. But we are not leaving it there; when the tax starts we will then organise them into formal operations,” he said.

    Source: http://thebftonline.com/business/mining/16921/small-scale-miners-to-pay-10-withholding-tax.html#sthash.ikV1bQxe.dpuf

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