taxation trends in mining' by warwick grigor, canaccord genuity at mines and money hong kong...
TRANSCRIPT
Presented at:
www.minesandmoney.com/hongkong
PRIVATE & CONFIDENTIAL
Mines and Money – Hong Kong, March 2013
Canaccord Genuity
Taxation and the Mining Industry, The African Context
Warwick Grigor – Executive Chairman
Taxation of The Mining Sector
4
Taxation of The Mining Sector
The Mechanics of Taxation
5
Taxation of The Mining Sector
The Mechanics of Taxation
Why Pick on Mining Companies?
6
Taxation of The Mining Sector
The Mechanics of Taxation
Why Pick on Mining Companies?
The Competing Interests
7
Taxation of The Mining Sector
The Mechanics of Taxation
Why Pick on Mining Companies?
The Competing Interests – The Need for a Balance
Resource Nationalism
8
Taxation of The Mining Sector
The Mechanics of Taxation
Why Pick on Mining Companies?
The Competing Interests – The Need for a Balance
Resource Nationalism
Complications Caused by Green Groups
9
Taxation of The Mining Sector
The Mechanics of Taxation
Why Pick on Mining Companies?
The Competing Interests – The Need for a Balance
Resource Nationalism
Complications Caused by Green Groups and NGOs
The Concept of Resources Rent
Mining Taxation in the African Context
11
Mining Taxation in the African Context
Corporate Tax Royalty Gov’t Carried Interest
Gov’t Buy-in Tax Break
Burkina Faso 20% 5% 10 Accel. Dep’n
DRC 36% 2.5% 5 Egypt 40%
Ghana 35% 5% 10 Accel. Dep’n
Guinea 35% 5% 15 20 Ivory Coast 25% 3% 10 5Liberia 35% 3% Mali 35% 6% 10 5Senegal 25% 3% 10 7Sierra Leone 30% 5%
Tanzania 35% 4% Accel. Dep’n
12
Mining Taxation in the African Context
Taxation Revenue is Essential
13
Mining Taxation in the African Context
Taxation Revenue is Essential
The Multiplier Effect
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Mining Taxation in the African Context
Taxation Revenue is Essential
The Multiplier Effect – Benefits Beyond Taxation
Resources in the Ground Benefit No-One
15
Mining Taxation in the African Context
Taxation Revenue is Essential
The Multiplier Effect – Benefits Beyond Taxation
Resources in the Ground Benefit No-One
What Do Governments Want?
16
Mining Taxation in the African Context
Taxation Revenue is Essential
The Multiplier Effect – Benefits Beyond Taxation
Resources in the Ground Benefit No-One
What Do Governments Want?
What Do Companies Want?
17
Summing Up
The mining sector is a tough business in which to operate and in which failure rates are high. Taxation policy needs to reflect this.
Profits from commodity price cyclical highs are an essential part of the mining business. They are needed to compensate for cyclical lows.
Taxation models from economists fail to consider social benefits and are best left to academics.
These social benefits are essential for emerging countries such as those in Africa and they are far more significant than tax recepts alone.
African countries that have lifted tax rates to 35%, whilst receiving royalties and requiring government ownership of equity, amongst other imposts, are turning away potential investors and doing the their people a disservice.
Recent changes in taxes structures in African countries have been ill advised.
Canaccord Australia
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