The Ghana Association of Small Scale Miners (GASSM) is up in arms with government over the introduction of a 10 percent withholding tax to be slapped on its members following the revision of the Income Tax, 2015, (Act 896).
According to GASSM, the 10 percent withholding tax is ridiculous and will erode the profits of the miners.
Speaking to Citi Business News the Public Relations Officer of the association, Francis Opoku said charging 10 percent withholding tax is a disincentive for miners.
“This issue recently came out when government introduced the new tax laws which cuts across all sectors. Initially when we heard of this news from the government, it was a shock to us because it was not one of the normal flat rate taxes but withholding. This is ridiculous because how do you take 10% out of someone’s gross profit. If this goes on then it means that small scale miners are being taxed more than any other industry in the country, it is not fair,” he stated.
Francis Opoku further argued that “Tax is supposed to be fair, it is supposed to be equitable and it is supposed to be flexible. In our case 10% is too much, as it works out to about 35% of net that is what makes it ridiculous and unfair.”
Government under the revised Income Tax law Act, 2015, (Act 896), hopes to broaden the tax net by directing purchasers of unprocessed minerals from unlicensed, small-scale and artisanal miners to pay a 10 percent withholding tax.
In 2014 alone the small-scale, artisanal and illegal mining business, accounted for 34 percent of national gold output representing approximately 1.6 million ounces
Ghana is estimated to be losing annually some 500million Cedis in taxes and royalties to the artisanal, small-scale and unlicensed gold miners.
The Regulators Standpoint
Meanwhile the Minerals Commission has justified government’s decision to tax small-scale, artisanal and illegal miners in the country.
According to the commission there is the need for small scale miners to pay appreciable tax to the state for national development.
Speaking to Citi Business News, the Chief Executive Officer of the Minerals Commission Dr. Toni Aubynn said the commission is currently engaged in formalizing the operations of the small scale miners by registering all illegal miners.
“I am sure the anticipation of the GRA is for the miners to be formalized and then asked to pay tax to the state because the state needs it. It is not for any one single person to pay tax. … But if you are doing illegal jobs of course you must be stopped because you cannot be taxed with that illegal job. But once one is earning income we should find ways and means to bringing you to the bracket to pay some tax to the state,” Dr. Aubynn stated.
GRA explains position
A Deputy Commissioner in charge of Policy Programs, Edward Gyambrah, speaking at a media interaction in Accra explained that before the new Act’s introduction, activities of artisanal and illegal miners paid no taxes except for value added tax (VAT) on their inputs.
He however also disagreed with concerns that the disorganized nature of the miners will render the new tax ineffective, explaining that measures are in place to help get every operator in that segment to comply as the minerals embark on an exercise to register them.
“Because they are difficult to reach, we are saying that when buyers buy their products, they should withhold; and that is the only way we can get them to also contribute to revenues, we are also depending on the minerals commission to formalized their operations which will make it more easier”
The Mining and Minerals Act 2006, Act 703 does not differentiate between small scale and large scale operations in terms of royalties and both are liable for royalty payment.
Civil societies comment
The 2012 and 2013 report of Ghana Extractive Industries Transparency Initiative (GHEITI) has recommended that “royalties paid be differentiated between large scale and small scale holders” whilst royalty payment may be instituted at the point of export for the small scale operators.
By: Norvan Acquah – Hayford/citibusinessnews.com/Ghana