Draft tax amendments disturb narrative SA Govt. will lend kindly ear to B4SA’s reform agenda
MINING MX / 04 SEPTEMBER 2020 - 21.33 / DAVID MCKAY
SOUTH AFRICAN mining has recently suggested there’s grounds for hope Government will respond positively to reform proposals placed before it by Business Leadership SA’s B4SA.
Roger Baxter, CEO of Minerals Council SA, which contributed the mining sector slides to the B4SA Government presentation, said visible signs of policy improvement could be within six months. A proposal, for instance, to incentivise exploration investment via tax benefits attached to so-called flow-through shares, could be met with a favourable response before October, he said.
Unfortunately, Government ‘policy’ doesn’t appear to be either homogenous, or synchronous. Whilst the National Treasury may view flow-through shares positively, it tabled in July Draft Taxation Laws Amendment Bill that may frustrate junior mining.
Addressing the tax treatment of allowable mining capital expenditure where mining services are provided through contractors, the draft amendments say only mineral right holders can benefit from accelerated depreciation; in other words, not the contractor miners. “It is anti-junior mining as it is junior miners who are most capital constrained and are most likely to need contractors,” said Paul Miller, a former mining company CEO.
“I hope the amendments are more a case of being poorly drafted (than policy),” said Errol Smart, CEO of Orion Minerals which is building the R4.5bn Prieska Copper-Zinc project in South Africa’s Northern Cape province. “I don’t know our project would have got going with these laws,” he said.
Said the Minerals Council when asked about the draft amendments: “The Minerals Council will be making a submission to the National Treasury on this feature of Draft Taxation Laws Amendment Bill pointing out that it will have an adverse impact on the industry and requesting a reconsideration”.
There’s also some confusion about whether the Department of Mineral Resources and Energy’s (DMRE’s) decision to withdraw an appeal regarding the ‘once empowered, always empowered’ clause in the 2010 Mining Charter is a benign move or not.
Styled by the Minerals Council as evidence reform was being supported by DMRE, dropping the appeal over the High Court’s decision relating to the 2010 Mining Charter is so it can contest an industry interpretation of once empowered, always empowered as contained in the 2018 Mining Charter, according to a note by Fasken, an attorneys.
Disclaimer - The views expressed here are not necessarily those of the BEE CHAMBER