The government has roped in illegal gold miners and patrons of their activities into the tax net, in a bid to raise more revenue to fund economic development.
The revised Income Tax Act, 2015, (Act 896), has made it compulsory for purchasers of unprocessed minerals from these unlicensed, small scale and artisanal miners to pay a 10 per cent withholding tax (WHT), in a move that could spur revenue growth.
The government is aiming at taking a part of the growing pie in the small scale, artisanal and illegal mining business, which accounted for 34 per cent (1.6 million ounces) of national gold output in 2014.
In that year, the country’s gold output fell by 17 per cent to 3.16 million ounces (US$3.18 billion) on account of lower production in all the major mining companies except those in the operations of small scale, artisanal and unlicensed operators.
A Deputy Commissioner at the Domestic Tax Revenue Division (DTRD) of the authority, Mr Edward Gyambrah, explained in Accra that the new WHT on the purchase of unprocessed minerals was in line with efforts by the government to broaden the tax base.
Earnings from the 10 per cent tax should complement the losses the country currently incurs through their operations as a result of their non-payment of royalties and other tax revenues.
Before the introduction of the new act, the activities of artisanal and illegal miners, locally called ‘galamsey,’ paid no taxes except a value added tax (VAT) on their inputs.
It is estimated that about GH¢500 million is lost annually in taxes and royalties to these artisanal, small scale and unlicensed gold miners.
Ensuring compliance
A Tax Policy Advisor at the Ministry of Finance, Dr Edward Larbi-Siaw, disagreed with concerns that the disorganised nature of operators in that bracket would render the new tax ineffective, explaining that measures were in place to help get every operator in that segment to comply.
“Because they are difficult to reach, we are saying that when buyers buy their products, they should withhold and that is the only way we can get them to also contribute to revenues,” he said.
Their products are mostly sold to the licensed gold buyers and the Precious Minerals Marketing Company (PMMC).
Illegal gold mining, locally called ‘galamsey,’ has been a thorn in the flesh of the country, as many of their activities degrade the environment while denying the state of revenues.
Dr Larbi-Siaw said the government was now hoping to reverse that trend by first getting them to contribute to national revenues.
“If you look at the way they are degrading the environment, dirtying the water and things like that the only way we can benefit from them is to let them contribute small. But we are not leaving it there; when the tax starts, we will then organise them into formal operations,” he said.
He further disagreed with concerns from some stakeholders, including the Chartered Institute of Taxation (CIT), that the new tax could relax the fight against the illegal mining business in the country.
Source: Graphic