Decisions made during the ANC Mangaung conference saw the discussions and speculations around the proposed state intervention in the mining sector being put to bed. These decisions will now influence the February 2013 Budget speech, says Deloitte.
“Based on what has been agreed by the ANC,” says Alex Gwala: Associate Director, Mining Tax at Deloitte, “an announcement by the Minister of Finance, Pravin Gordhan, about the possible introduction of some proposed interventions, can be expected.”
In his ANC address in January 2013 President Zuma stated clearly that ‘the State must capture an equitable share of mineral resources rents through the tax system’. This is indeed the confirmation that the State is going to be introducing new additional forms of taxes for the mining industry.
Even though he did not spell out the types of taxes that will be introduced, we know from the SIMS document that was published early last year that there was a proposal to introduce the Rent Resource Tax (RRT), which is similar to the Mining Rent Resource Tax (MRRT) that was introduced in Australia in 2012.
In terms of the MRRT, a mining company in Australia will only have to pay tax of 30% when its annual profits reach $75 million (or R650 250 000). “The RRT in South Africa could be triggered once an investor has made reasonable returns. However, what is regarded as a reasonable return will ultimately be defined by National Treasury, although it has been suggested that the level of return will be approximately 15%.
It appears from the current proposals, that the RRT will be calculated on the surplus after taking into account direct mining costs and a reasonable return, but before indirect costs,” he says.
Download the full article . . . . Rent Resource legislation for mines could follow ANC conference
For a more detailed discussion, contact Alex Gwala (Corporate Tax Specialist at Deloitte Southern Africa) at email@example.com
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