Wednesday, January 13, 2016

Out of US$23bn from mining

…Ghana gets 7%

The country earned US$1.7billion, roughly 7%, in taxes and royalties out of a total US$23billion, which is the value of gold produced in the country from 2010 to 2013, a study by the Africa Centre for Energy Policy has shown.

Using Newmont as a case-study, ACEP said the scant rent the country received from mining happened at a time when gold prices were good.

“The cost of production per ounce of gold was US$596 in 2012 and US$542 in 2013. This indicates a revenue of US$850 – US$1050 per ounce of gold in 2012/2013,” the think-tank said in a press statement read by Dr. Ismael Ackah, a policy analyst.

Titled ‘Golden Days for Newmont’, the report said Newmont from 2003 to 2012 paid less than US$500million in taxes to the government of Ghana despite reporting annual revenues of US$931million in 2012, US$919million in 2011 and US$655million in 2010, totalling about US$2.5billion in three years.

“While Ghana’s economic performance is declining over the years, the mining sector grew by 11.7% in 2013 (EITI, 2014),” the study indicated.

Over the years, there has been a clarion call for government to find ways of clawing back a lot more than the country currently gets from mining rents, especially as mining communities have not seen much benefit from same.

The companies have argued that developing communities is the task of government and not theirs, once they meet their tax obligations to the state.

In January 2012, government inaugurated a team of negotiators led by Prof. Akilakpa Sawyerr, to renegotiate existing mining contracts which were widely seen to have failed citizens.

On December 23, 2015, the Ministry of Lands and Natural Resources released a press statement to the effect that government had successfully renegotiated the contract for Newmont, the largest single investor in gold mining in Ghana. 

“The proposed changes are expected to improve benefits for the Ghanaian government and economy, and increase revenues for government while assuring a fair, predictable and beneficial long-term basis for Newmont’s business in Ghana,” said the statement signed by sector minister Nii Osah Mills. 

At the end of the negotiations Newmont is expected to make some upfront payments of up to US$27million, which Nii Osah Mills says the company is organising to pay.

While commending government for renegotiating the Newmont contract, ACEP said the country needs a law on resource rent tax in the mining sector “to capture a share of excessive profits and introduce other exempted taxes without negatively affecting long-term mining investment”.

The country, it added, needs a mining investment law to guide how mineral revenues are collected, disbursed and spent; as well as effective transparency and accountability to track the share of royalties that goes to traditional authorities. Source:B&FT

‘New income tax law is to consolidate scattered tax laws’

Mr. George Blankson, the Commissioner-General of the Ghana Revenue Authority, has said the main reason for passing the new income tax law is to revise and consolidate the many scattered tax laws and amendments into one document.

It will also simplify the Act’s provisions and make it more user-friendly to enhance efficiency and facilitate compliance.

“There is a need to open up for scrutiny and clear some misconceptions about the new tax law,” said Mr. Blankson at a stakeholders’ forum that created a platform for tax consultants, tax professionals, accountants, Ministry of Finance and others in the businesses community to deliberate on the new law so as to enhance understanding and help clarify some misconceptions about it. 

The agenda for the forum was aimed at ensuring that rough edges are smoothened for effective implementation of the new income tax law.

The B&FT has gathered that the Revenue Administrative Bill is expected to be laid in Parliament during 2016. Its passage will focus on measures that will ensure tax compliance and improve revenue administration rather than introduce new taxes. 

These measures will include the following: moving all processes to an electronic platform and accelerating the shift to a functional form of administration in all tax offices; review the current thresholds for the classification of firms as large, medium or small to reflect current trends; establish joint audit/investigation teams to conduct audits and investigations; intensify the monitoring of Free Zones Enterprises by rolling-out the Integrated Free Zones Unit in line with the 2nd GRA Strategic Plan 2015 -2017. 

The measures will also implement the Electronic Point of Sale project, and roll-out fully the excise tax stamp project. 
Mr. Edward Gyambrah, Deputy Commissioner Policy and Programmes, Domestic Tax Revenue Division, in a presentation on the various aspects of the new income tax law, said Capital Gains Tax is no longer a separate tax on its own. 

He said gains realised on disposal of assets or liabilities are to be included in business or investment income, and taxed at the applicable income tax rate.

Further, Gift Tax is also no longer a separate tax on its own; and gifts received in respect of employment, business and investment are to be included in calculating the gains and profits from employment, business and investment, he said.

Mr. Gyambrah said mortgage interest relief, which previously was available for more than one residential building for individuals, will now be restricted to just one building during the lifetime of that individual.

He said the law also allows deductions for repairs and improvements, while research and development expenses may also be deducted irrespective of whether or not they are of a capital nature -- adding that the Act 896 exempts from tax gains made from the realisation of assets from a merger, amalgamation or reorganisation when there is a continuity of at least 50 percent of the underlying ownership.

He said while in the past a Private Ruling was binding only on the Commissioner General, the new Act makes such rulings binding on the applicant as far as the transaction in respect of which the ruling was given is concerned.

The new Income Tax Act 2015, Act (896), was officially launched in 2015 -- aimed at revising and consolidating the law relating to income tax and simplifying the Act’s provisions.

The Act also makes it more user-friendly, retains provisions that are peculiar to income tax administration, and also enhances efficiency as well as facilitating compliance while broadening the tax base -- removing the narrow and distorted tax base of the Internal Revenue Act 2000 (Act 592), thus rationalising, streamlining and restricting tax concessions in the country.

McOttley poised for 2016

McOttley Holdings, a leading financial and real estate company in the country, has announced plans to position itself as a leading financial institution in the country with innovative and world-class products and services.

Speaking at a staff get-together in Accra recently, Group President of the Company Richard Dugan said: McOttley is not here to compete but to create a niche for itself in the industry as a leader, not a learner”.

The Group President was very upbeat about the performance of McOttley in 2016, predicting that the year will be very fruitful for the company -- adding that the pragmatic measures adopted following the companys strategic management meeting held last year, coupled with revitalised systems, will facilitate the process to achieve company goals.

The year 2016 holds a lot of positive things for us as a company, and we are ready for them.  2016 is our year for attaining our best performance ever,he declared, stressing that the company will be mightier and better in 2016 than 2015.

The Group President used the platform to appeal to the company’s board, management and staff to work hard in order to move McOttley to higher heights.

McOttley Holdings, with its subsidiary firms -- namely McOttley Capital, McOttley Money Lending and McOttley Properties -- in 2015 won two prestigious international awards.  The Group won the Star of Quality Award in the Gold Category, which was organised by BID in Geneva, Switzerland. 

Its subsidiary, McOttley Capital, was also adjudged the Best Customer Service Investment Bank in Ghana and Best New Investment Bank in Ghana for 2015 by International Finance Magazine (IFM) in London.

The Group President dedicated these awards to the board, management, employees and loyal clients of McOttley for their selfless contributions to the companys vision.

Employees of the company who performed very well in different fronts were also recognised at the get-together. They were presented with plaques and some cash incentives. 

The awards range from the Most Hardworking and Committed Staff of the year, Best Promising Managing Director, Best Promising Manager of the year, and Best Staff for Client Relationship Management. 

The Credit Department received an award for exceeding the loan recovery target for the year. The awardees included Rauf Alhassan (Dispatch), Paul Quoba (Dispatch), Drucilia Arthur (Sales) and others.

The Company gave out these awards to serve as motivation for staff to work harder in achieving goals set for the year 2016.