TAX HOLES IN MINING

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Nickel ores at San Jorge Island. Photo by Axiom Mining Solomon Islands.
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PM: need to properly tax miners

By EDDIE OSIFELO

PRIME Minister Manasseh Sogavare says there’s lack of proper taxation regime to address loopholes in the mining industry.

This was after Opposition Leader, Mathew Wale called on the Government to place an indefinite moratorium on mining licenses.

This include both prospecting and mining leases until new legislation has been passed in parliament or at the very least that the weaknesses in the current law are rectified.

Sogavare told Parliament last week that they entered mining really unprepared as a nation.

“We don’t have a specific proper taxation regime for mining.

“What do you do with excess profit?” he asked.

Sogavare said there is nothing like that in the existing system.

He said mining can be taxed as any company on their profit.

“When you frontload their costs, their big capital costs, they will obviously declare loss for nearly seven years.

“So, you don’t collect company taxes from them,” he said.

“So, what do we do. Do we value add on something we take from them?

“That decision was never made right in the beginning. We adopted a chaotic mining legislation which is already there,” he added.

Sogavare added and pressured by the need to float the economy, the need they must develop our resources to help us, they go ahead.

“This is a tough thing when we held by the throat, we allow painfully some of these things to continue,” he said.

However, Sogavare said: “The time is right for us to look seriously more on how we develop our important resources like fish, minerals and forestry.

“The main ones that continue to hold this country even before Independence.

“We owe the existence of this country on these important resources,” he said.

Sogavare said the development strategy that was handed down, that they have problem with it.

“We will work on it.

“There are people now interested on establishing gold refinery, this is something we need to look seriously into it. So, we refine the gold before it goes,” he added.

Opposition leader Wale said the first-come-first-served rule in the current law is outdated and is a great risk to the proper management of our minerals sector. 

He said it is being exploited by companies with dubious capacity owned by shareholders with dubious characters.

“The government’s policy to fast track three mining licences is a bad decision.

“Our minerals are a non-renewable resource and must be protected,” he said.

Wale said the companies that are being considered for these fast-tracked licenses have a clear and direct association with individuals we know from the logging industry to have participated in transfer pricing and other illegal and unethical conduct.

He said the government must not allow the practices in the logging industry to be migrated over to the mining industry.


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