Gov’t moves to streamline taxation on mines, quarries

KIGALI - Investors in the mining sector should expect a clearer tax policy and the government more revenue when a new Bill establishing royalty tax on mines and quarries is passed.The Bill was tabled before the lower chamber of parliament by the Minister of Finance, John Rwangombwa, who said the decision was based on research adopted from best practices in other countries.
Mining activities at a facility by Rutongo Mines. The new legislation will streamline the sector. The New Times / File
Mining activities at a facility by Rutongo Mines. The new legislation will streamline the sector. The New Times / File

KIGALI - Investors in the mining sector should expect a clearer tax policy and the government more revenue when a new Bill establishing royalty tax on mines and quarries is passed.

The Bill was tabled before the lower chamber of parliament by the Minister of Finance, John Rwangombwa, who said the decision was based on research adopted from best practices in other countries.

He said Rwanda is endowed with minerals and quarries that could help the economy grow, if adequately managed.

Dr. Michael Biryabarema, the Deputy Director General of Rwanda National Resources Authority (RNRA), told The New Times that $117 million was received from the mining sector in taxes for the budget year 2010/2011.

During debate, MPs raised concerns on a wide range of issues, including miners’ safety; the environment; effect on a current district tax system; and the lack of reliable data on the country’s mining sector.

Agnes Mukazibera said: “Past experiences make it clear that mine workers have safety problems. I wish to know measures of sensitisation and protection of those people”.

Other lawmakers such as Adolphe Bazatoha said that the sector currently operates in a chaotic manner and called for measures to streamline operations.

On environment protection, Landrada Umuraza said: “The exploitation of minerals certainly goes hand-in-hand with an excessive way of the destruction of the environment and I have wondered; how does the Bill cater for environmental concerns, since everywhere where it [mining] is being done, there is this alarming problem”?

Umuraza suggested that in places where environment degradation exists, a cost and benefit analysis should be considered to weigh the best consideration – mineral tax revenue or the environment.

Theoneste Safari Begumisa wondered whether some chunk of the expected tax revenue will go into refurbishing degraded areas – planting trees and covering pits, while Tharcisse Shamakokera wanted to know whether stakeholders are consulted so they could pay taxes willingly.

Rwangombwa noted that the new tax arrangement will replace the previous one but tax collections will still go to the districts and that “there will be no double taxation.”

Regarding operating in chaos, workers safety, and the environment, Rwangombwa said RNRA set up regulations and is working with districts to curb incidents.

In an interview later, Rwangombwa said: “We have several companies that have been given temporary mining concessions to do exploration and find out what is really the potential we have in terms of minerals.

“Some of them are completing this year. So, we’ll see what they have got. If it is convincing, then we can move on and give them long-term concessions. If not, we’ll have to bring in some other players to really get us to know what is on the ground.”

Meanwhile, Biryabarema said that for investors, who have government concessions, one of their big responsibilities is to determine the mineral deposits and additionally, for every mining license, there has to be a definition and estimation of the mineral deposit one is going to mine.

“The government is putting in resources and trying to do upgrade surveys, improve the definition of potential, so as to invite more serious investors to come and do exploration even in areas which are virgin,” he stated.

Stakeholders consulted

Martin Kahanovitz, the CEO Rutongo Mines Ltd., the largest cassiterite miner in Rulindo district, told The New Times that they "were consulted."

“And we are paying royalties as it is done everywhere in the world. Someone usually has to pay taxes,” Kahanovitz said.

“It is problematic but we are going to start conducting environmental impact assessment studies”.

He said they would bring in a South African company to train a local company which will carry out the work.

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