Business News of 2014-08-13

Mining companies call for action on Revenue Administrative bill

The Ghana Chamber of Mines is calling for action to be expedited on the passage of the Revenue Administration Bill into an Act to allow mining companies to offset their tax liability against their VAT refund.

This is the result of Ghana Revenue Authority’s (GRA) delay in refunding surplus VAT owed to mining companies which was estimated at GH¢ 250 million as of June 2014.

The mining companies had earlier proposed to offset their taxes against the VAT refund but the GRA said it was not possible because the current Internal Revenue Service Act did not allow it.

The chamber is, therefore, demanding a quick passage of the Act to enable the mining companies to offset their tax liability against their VAT refunds.

This was revealed by the acting Chief Executive Officer of the Ghana Chamber of Mines, Mr Sulemanu Koney, at a forum held in Accra last week.

Mr Koney also pointed out that the mining industry faced a high tax burden which was affecting the fortunes of the industry.

He cited the corporate tax rate which was reviewed from 25 per cent to 35 per cent and the royalties which has been increased from three-six per cent to a flat rate of five per cent of the total volume of gold produced as some of their challenges.

He indicated some other contributors which included the revision of the capital allowance to a flat rate of 20 per cent over a five-year period, and the abolishment of the five per cent investment allowance.

High cost of electricity and diesel

Mr Koney also stated that the high cost of inputs such as electricity and diesel was affecting the operations of the mining industry.

He said the ex-refinery price paid by mining companies for diesel was significantly higher than that paid by other users of diesel.

“The energy charge for firms with energy demand similar to the mining companies was 37.03 per cent lower than that paid by mining companies”, he said.

The ex-refinery price paid by mining companies for diesel from February 2014 to August amounted to GH¢ 3706.74, compared to the GH¢ 2679.54 paid by generic consumers for the same quantity at the same period.

Contribution to national revenue

In spite of the challenges, the mining sector has been the number one taxpayer and highest contributor to the Ghana Revenue Authority’s (GRA’s) collections in the last five years.

The mining sector contributed about GH¢1.1 billion to GRA, representing 18.7 per cent of GRA’s total direct taxes in 2013 and GH¢ 518 million in corporate tax to the GRA; representing 19.5 per cent of the total company tax collected in 2013.

Mr Koney said the industry accounted for 37.6 per cent of the country’s gross export revenue in 2013, reinforcing its position as a leading source for foreign exchange and a major contributor to the country’s balance of payments.

He added that the producing members of the chamber returned US$ 3.1 billion, representing 68 per cent of their mineral revenue, through the Bank of Ghana (BoG) and the commercial banks in 2013.

“This has significant bearing on the international reserve position of BoG and the stability of the monetary system as a whole”, he said.

Source: graphic.com
« Previous | Next »
View Comments
Sponsor Links
News Categories
Site Menu