I tried to raise the MOZ new mining laws back in 2012 - >
11234724 - it was deemed "downramping disguised as scaremongering" by Prime1
but of course when he raises in relation to Tanzania, it's for the "benefit" of investors, lol.
A new mining law for Mozambique
The Mining Law 20/2014 of 18 August 2014 (the
New Mining Law) came into force in Mozambique on 22 August 2014 replacing the previous mining regime under Mining Law 14/2002 of 26 June 2002 (except in relation to mining contracts that were in force prior to 22 August 2014).1
The New Mining Law was precipitated by the broad political consensus that Mozambique and its citizens have not benefitted sufficiently from the increase in mining activity and investment in Mozambique. It was developed based on the Government's 2013 Policy and Strategy for Mineral Resources (
Resolução No 89/2013 de 31 de Dezembro) which, although continuing to identify foreign investment as a key factor, makes it clear that creating benefits for Mozambican nationals is the primary goal of legislative reform. It is also designed to bring mining legislation in Mozambique in line with international best practice.
The New Mining Law is expected to have far reaching consequences for investors in the mining sector in Mozambique. Key changes to the mining regime made by the New Mining Law include:
- the provision that new mining contracts must provide for State participation in the mining operations (no minimum of maximum percentage participation is specified),
- the introduction of local content requirements; non-nationals must "associate" themselves with a Mozambican national in order to provide goods and services to mining operators,
- the introduction of domestic supply obligations that give the Government the right to buy minerals at market price for use in the local industry if Mozambique's commercial interests so require,
- a broad provision that all transfers of mining rights, whether direct or indirect, are subject to approval by the Ministry of Mineral Resources (MIREM),
- the introduction of signing bonuses for mining concessions awarded through public tender;
- the requirement that the details of new mining contracts (except for strategic and competitive information) must be published in Mozambique's Official Gazette (Boletim da República),
- the discontinuation of the tax stabilisation provision which featured in the previous mining law. The New Mining Law explicitly excludes matters relating to tax from mining contracts. This may mean the Government will no longer be able to provide tax stability or deductibility undertakings in mining contracts,
- the reduction of the maximum period for exploration licences from 10 to 8 years. and
- the introduction of a requirement for concession holders to start production within 48 months of the issuance of a mining concession. Under the previous law, production had to be started within 36 month of the issuance of a DUAT (right to use and enjoy land) and an environmental permit.
The New Mining Law will apply in tandem with other relevant legislation; for example, a new tax regime for Mining Production Tax is due to be approved in the near future. In addition, the law on Public Private Partnerships, Large Scale Projects and Company Concessions 15/2011 of 10 August 2011 (the
Mega Projects Law), although not specific to mining, will still apply to mining projects.
Herbert Smith Freehills is not qualified to advise on Mozambique law. This article is based on our literal reading of the new law, and our practical experience of working on mining projects in Mozambique.
Endnote
- A mining operator may opt for its pre-existing mining contract to be governed by the new law or if a pre-existing contract and the previous law are silent on aspects that are dealt with in the New Mining Law, then the New Mining Law shall apply to those parts of the relevant contract.
http://hsfmining.blogspot.com.au/2014/09/a-new-mining-law-for-mozambique.html
On 23 September 2014, the Mozambique Government enacted Law No. 28/2014 (the new Mining Tax Law) which introduces a new tax framework for the Mining sector.
The new Mining Tax Law replaces the previous regime (provided by the Law 11/2007 and 13/2007 of 27 June 2007) and will enter into force on 1 January 2015. Although this new law contains norms that were already provided in previous legislation, it introduces some changes to the taxation regime applicable to mining operations, including a new Tax on Resource Rent, as highlighted below.
The new Mining Tax Law will be applicable to all companies conducting mining activities within the Mozambican territory. Taxpayers complying with their obligations on the basis of existing concession agreements signed under the previous law, should continue complying with the previous law, except if they submit an express application to apply the new regime.
The new law provides for the following taxes:
- Mining Production Tax
- Surface Tax
- Resource Rent Tax
- Corporate Income Tax (CIT, which is currently 32%)
- Local taxes (if applicable/when applied)
- Other taxes established by the General Law
Liability for the Mining Production Tax arises when the mineral is extracted. The applicable tax rates are 8% for diamonds, 6% for precious and semi-precious stones or metals and heavy sands, 3% for base metals, coal and ornamental rocks, and, finally, 1.5% for sand and rock, based on the value of such metals. A tax reduction of 50% of the Mining Production Tax is allowed when the production of minerals is to be used by the local industry.
Furthermore, the new tax regime provides tax stability for a period of up to 10 years, subject to the additional payment of 2% of the Mining Production Tax, effective from the 11th year of production.
Moreover, under the new Mining Tax Law the CIT liability of companies holding concession contracts will be calculated separately for each concession contract, as it was already provided in the general tax law. This means that a separate tax return has to be submitted for each concession.
The new law requires all mining companies in Mozambique to comply with the local transfer pricing rules, under the principle of independent entities and lists the transactions for which this principle applies, among which are transactions referent to different concessions held by the same taxpayer.
The newly Mining Tax Law further establishes that mining rights are considered as immovable property and that all capital gains, arising from the direct or indirect transfer of mining rights, by nonresident entities with or without permanent establishment in Mozambique, will be taxable at a fixed rate of 32%. This capital gains tax shall become due and payable by the by the seller or transferor but the purchaser and the Mozambique entity holding the mining rights has several and joint liability for the payment of the tax. In the case of doubt on the price of the transaction, the tax authorities may refer to the best international practices to determine the price.
In fact, the law sets out specific rules relating to the calculation of gains, taxable income, deductible costs and amortization in the framework of mining activities, rules that were previously established under the different concession agreements.
Another change introduced by this law is that income from the provision of services rendered by nonresident entities to Mozambique mining companies is subject to withholding tax at the rate of 10%.
Finally, the new Mining Tax Law grants exemptions from custom duties for a period of five fiscal years, particularly in relation to the importation of capital and goods. Note that the new law no longer grants Value Added Tax exemptions on the import of the same goods.
http://www.ey.com/GL/en/Services/Ta...regime-and-incentives-for-the-Mining-Industry
