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PART EIGHT
ROAYLTY, INCOME TAX AND OTHER
FINANCIAL REGIME
63. Royalty
1/ The holder of a mining license shall pay royalty based on the sales price of the commercial transactions of the minerals produced in accordance with sub-article
(2) and (3) of this Article.
2/ The amount of royalty payable by holders of large scale mining licenses shall be at the following rate:
a) precious minerals 8%
b) semi-precious minerals 6%
c) metallic minerals 5%
d) industrial minerals 4%
e) construction minerals 3%
f) salt 4%
g) geothermal 2%
3/ The amount of royalty payable by the holders of artisanal and small scale mining licenses shall be at the rate payment of the royalty.
64. Provisional Assessment of Royalty
1/ In the event that it is impractical to assess the amount of any royalty, the licensee shall make a provisional payment of the royalty.
2/ When the amount of the royalty is ascertained, the licensee shall pay any balance or shall be repaid any excess sum paid on such provisional assessment.
3/ The Licensing Authority may, in circumstances it deems appropriate, cause the reduction, suspension or waiver of the payment of royalty by requesting the appropriate government body.
65. Income Tax
1/ Any holder of a large scale mining license shall pay income tax in accordance with the Mining Income Tax Proclamation No. 53/1993 (as amended).
2/ Income tax to be paid by holders of artisanal and small scale mining licenses shall be determined by the laws of the states.
66. Collection of Information
1/ The Licensing Authority may, by notice in writing, require any licensee to produce or make available any oral, written or electronic information as may be required to ensure the proper adherence to the provisions of this Proclamation with respect to royalty.
2/ The Licensing Authority may issue an order for conducting investigation in accordance with Article 54 of this Proclamation where it believes that information required under sub-article (1) of this Article is being withheld or destroyed.
67. Failure to Pay Royalty and Income Tax
If a licensee fails to pay royalty, income tax or any other payment on the due date, the Licensing Authority may by order prohibit the disposal of any minerals from the mining area held by the licensee until all outstanding payments have been paid or until an arrangement has been accepted by the Licensing Authority for the payment thereof.
68. Rentals
1/ Any licensee shall pay annually in advance surface rentals for the license area. The rate of rentals shall be specified by laws to be issued by states and any amendment thereto shall only apply to licenses issued after the date of amendment.
2/ Any licensee shall also pay annually in advance a rental for the area covered by a lease. Such rental shall be fixed in the instrument granting the lease and shall remain fixed during its term, unless the instrument provides otherwise.
69. License Fees
License fees shall be paid for the issuance and renewal of licenses in accordance with this Proclamation. The amount and manner of payment of such fees shall be determined by regulation and the laws of states as appropriate.
70. Government Participation
Without prejudice to its right to undertake mining operations under Article 8 of this Proclamation, the government may acquire without cost a participation interest of five percent of any large scale or small scale mining investment. An additional equity participation of the government may also be provided by agreement, which shall specify the percentage, timing, financing, resulting rights and obligation and other details of such participation.
71. Guarantee
The Licensing Authority may require the applicant for a license or renewal or for the transfer, assignment or encumbrance of a license to provide cash, bank or other guarantee to secure the applicant’s obligations. The conditions of such guarantee shall be determined by directive.
72. Exchange Control
1/ A holder of large-scale or small-scale mining license producing exportable minerals may retain a portion of foreign currency earning as may be determined by directives of the National Bank of Ethiopia and use it for settlement of transactions in foreign currencies.
2/ A foreign investor holding a large-scale or small-scale mining license may make the following remittances out of Ethiopia in the currency of investment or in an approved currency at the prevailing rate of exchange on the date of remittance:
a) profits and dividends accruing from mining investment;
b) principal and interest on a foreign loan;
c) fees, royalties or other payments accruing pursuant to technology or management agreement relating to the mining investment;
d) proceeds from the liquidation of a mining business enterprise;
e) payment from the sale or transfer of shares of a mining investment or acquisition in part or in whole of a mining operation by a domestic investor.
3/ Expatriates employed in mining operations may remit salaries and other payments in accordance with the relevant exchange regulations.
73. Exemption from Customs Duties and Taxes
1/ Any consumables, equipment, machinery and vehicles that any holder of an exploration license or his contractor may import into Ethiopia and required for its operations in accordance with the approved work program shall be exempted from customs duties and taxes.
2/ Any equipment, machinery and vehicles that any holder of a small scale or large scale mining license or his contractor may import into Ethiopia and required to start the mining operation in accordance with the approved work program shall be exempted from customs duties and taxes.
3/ The holder of a small scale or large scale mining license may import free of customs duties consumables required to start and sustain commercial production for the first three months.
4/ The holder of a small scale or large scale mining license who wishes to embark on a major mine production expansion shall have the right to import free of customs duties and taxes equipment and machinery needed for the expansion provided that the Licensing Authority has approved the expansion program.
5/ The holder of artisanal mining license, small scale mining license or large scale mining license shall be entitled to export free of customs duties and taxes minerals produced according to the license.
6/ The holder of artisanal mining license or the holder of any construction minerals mining license issued for the mining of sand or selected materials shall not be entitled to exemptions from customs duties and taxes under sub-articles (1) to (4) of this Article.
7/ Any item imported free of customs duties and taxes into Ethiopia pursuant to the provisions of this Article may not be sold in Ethiopia without having obtained permission from the Licensing Authority and paid the required duties and taxes; provided however, that such item may be re-exported free of customs duties and taxes.
74. Registration and Representation
1/ Any licensee shall be registered in the registry of trade with the appropriate authority and shall maintain an office in Ethiopia during the entire term of the license.
2/ A licensee shall not be required to obtain any other authorization or permission from any other government office in order to produce, sell or export minerals covered by the license or to import any goods or enter into contract for the acquisition of license of any intellectual property required for mining operations.
3/ The provisions of sub-article (2) of this Article shall not relive a licensee from complying with obligations with customs and bank formalities.
75. Government Assistance
1/ The government may provide incentives and assistance to:
a) mining operations that deemed to be vitally important in addressing the immediate socio-economic problems of the country;
b) mining operations that promote the domestic utilizations of the resource produced through processing or beneficiation; and
c) artisanal mining carried out by cooperatives.
2/ The type and mode of incentives and assistance shall depend on the nature of the mining operations and shall be prescribed by regulation.
76. Settlement of Dispute
1/ Any dispute, controversy or claim between the Licensing Authority and a licensee arising out of, or relating to an agreement for reconnaissance, exploration, retention or mining, or the interpretation, breach or termination thereof shall, to the extent possible, be resolved through negotiation.
2/ In the event that agreement can not be reached through negotiations, the case shall be settled by arbitration in accordance with the procedures specified in the agreement. An arbitral award shall be final and binding upon the parties.
3/ Any party aggrieved by the decision of the arbitration may lodge an appeal to the concerned court.
77. Termination of Mining Rights
1/ Mining rights shall terminate if:
a) a licensee relinquishes the whole area or surrenders the license;
b) a license is revoked by the Licensing Authority pursuant to the provisions of this Proclamation, regulations and directives;
c) a license expires without being renewed; or
d) without prejudice to the rights of heirs, a licensee dies, or where the licensee is a juridical person, it is liquidated or declared bankrupt.
2/ Upon termination of mining rights of the holder of a small scale or large scale mining license, the government may, unless an agreement specifies otherwise, acquire all of the immovable and movable property used in the mining operations at a price equal to the then unamortized value of such assets, as shown in the financial book of accounts of the licensee. If the government does not exercise such right, the licensee shall be free to dispose such assets to another person in accordance with the applicable laws, or otherwise he shall be obliged to remove them as required by his environmental obligations.
3/ The licensee shall be required on termination of a small scale or large scale mining license, to fence and safeguard to the satisfaction of the Licensing Authority, any pits and such other works in the license or lease area so that the health, life and property of persons may not be endangered.
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