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However, South African mining companies enjoy generous tax treatment: they are able to deduct 100 per cent of much of their capital expenditures against tax while gold mining companies pay a corporation tax rate according to a formula that keeps remittances to government low.
Gold mining companies are taxed in terms of a formula which by and large, takes into account the profitability of the company and provides relief in cases where margins are below 5% (often referred to as the tax tunnel). The gold mining formula was introduced to encourage gold mining investment and the mining of marginal ores. Despite the fact that the gold mining industry is reaching its sunset years, it remains a major contributor to employment in South Africa.
Mining Tax Mining forms one of the leading industries in South Africa, playing a vital role in the economy. Due to the complexity of the South African tax laws and the impact thereof on the industry, its is necessary to have a thorough understanding of not only the tax legislation, but also the specific needs of the South African mining industry.
Accordingly, the section 36 (11) (b) costs will be capitalised to mining capital expenditure and can only be claimed against mining income. In the context of the lockdown the section 36 (11) (b) costs would appear to be incurred during a time of non-production for mining companies.
Mining tax incentives, proposed changes deferred. An amendment proposed to sections 15 and 36 of the Income Tax Act No. 52 of 1968 by the Draft Taxation Laws Amendment Bill (31 July 2020) has been deferred. The amendment, as proposed, would have had unintended income tax and royalty tax consequences. National Treasury on 13 October 2020 released a
9/25/2019· The Mineral and Petroleum Resources Royalty Act 28 of 2008 (Royalty Act) sets out the revenue-based royalties payable on mineral resources that are extracted within South Africa and ‘transferred’. The Royalty Act differentiates between refined and unrefined mineral resources. The mining royalty percentage is capped at 5 per cent for refined mineral
The formula tax, therefore, has the effect that a gold mine can continue to operate at marginal profit levels without paying tax until it regains profitability sufficient to attract tax. In this way it preserves employment in an industry which has a large number of employees and
12/1/1984· RESOURCES POLICY December 1984 265 South African gold mining taxation Tax formula y = 60 _360 y = 60 _480 X X Profit:revenue ratio (x) 10% 10% Tax rate 24% 12% Profit:revenue ratio (x) 20% 20% Tax rate (y) 42% 36% Increase in tax rate 75% 200% Although the formula, given the parameter b, corresponds to the principles of a resource rent tax, the built-in progressive tax
on a two-tier system. The nature of the gold mining tax formula encourages the mining of marginal gold ores. Firms that are involved in the mining of gold are subjected to a "tax tunnel", which is a tax free revenue portion. This is against the equity principle of taxation because it separates companies on the basis of what they
11/28/2013· As mentioned above, a mining company is entitled to claim 100% of its qualifying capital expenditure (capex) as a deduction against its taxable income, subject to two limitations or the so-called "outer” and "inner” ring-fencing provisions, i.e. such capex can only be claimed against "income derived from mining operations” or so-called mining income and secondly where a company operates two or
MINING TAX LAW Description The Mining Tax Law postgraduate certificate course aims to provide candidates with a thorough grounding in the fundamental principles of mining tax law and to provide insight into the mining industry on both a general and specific level. Outcomes At the end of the course, students should have developed the:
The history of mining and the current taxation legislation applicable to the mining sector in South Africa was briefly discussed and analysed to provide an understanding of this industry. Australia recently introduced new taxation legislation and incentive scheme for the mining sector, namely the Exploration Development Incentive, effective