Post by
crowcreekkate on Nov 17, 2011 1:17pm
Ghana : To Hike Taxes on Mining Companies
Taxing news…
As investors move past Argentina’s surprise repatriation mandate, Ghana takes its turn in the spotlight, announcing plans to boost its revenues from the mining industry by hiking taxes. Reuters Africa has reported that the 2012 budget delivered to the parliament includes an increase in the tax rate on miners to 35%, from 25% currently, with a proposal to introduce a separate 10% tax on windfall profits.
The move follows talks between Ghana's government and gold miners last month, in which the government proposed new ways for the country to benefit from the soaring price of the precious metal. According to the article, this decision was prompted by the International Monetary Fund, who recently recommended that Ghana, Africa's second-biggest gold producer nation, consider increasing taxes or introducing new ones to boost revenue.
Ghana, also the continent's newest oil producer and the world's second largest cocoa grower, expects its GDP to grow 9.4% in 2012 from 13.6% in 2011. An analyst at Standard Chartered commented that, "With oil not expected to contribute hugely significantly to overall revenue for some time, the effort to raise revenue elsewhere in the economy, especially the 10 percentage point increase in the tax rate for mines - is a sound move”. While that may be true, miners are certainly not going to be excited about a tax hike.
This news weighed on heavily on companies with large exposure to Ghana including Golden Star (GSC) (100% Ghana), Keegan Resources (KGN) (100% Ghana), Endeavour Mining (EDV) (34% Ghana, post Adamus Resources (ADU) merger). It also impacts Perseus Mining (PRU), PMI Gold (PMV) and Newmont Gold (NEM).