No withholding tax on gold export from January 2022 - Minister

BY: Timothy Ngnenbe
 Mr Benito Owusu-Bio (2nd from left), a Deputy Minister of Lands and Natural Resources, presenting the Mining Company of the Year Award to Mr Alfred Baku (2nd from right), Executive Vice-President and Head of West Africa Operations for Goldfields
Mr Benito Owusu-Bio (2nd from left), a Deputy Minister of Lands and Natural Resources, presenting the Mining Company of the Year Award to Mr Alfred Baku (2nd from right), Executive Vice-President and Head of West Africa Operations for Goldfields

Effective January 1, 2022, small-scale miners (SSM) will no more be required to pay three per cent withholding tax on gold at the point of export through the Precious Minerals Marketing Company (PMMC).

This follows the government's fiscal policy to scrap the three per cent withholding tax on processed gold and replace it with 1.5 per cent withholding tax on unprocessed gold.

The Minister of Lands and Natural Resources, Mr Samuel Abu Jinapor, who made this known, stated, “ "For the avoidance of doubt, there will be no tax collected at the point of export through the PMMC from small-scale miners," he stressed.

Mr Jinapor, who said this in a virtual address at the 7th Ghana Mining Industry Awards (GMIA) held in Accra last Friday, said the decision was arrived at after thorough stakeholders engagement on the merit of the three per cent withholding tax policy.

The Ghana Revenue Authority (GRA) implemented the three per cent withholding tax policy on the export of gold from the country in 2019.

However, the Ghana National Association of Small-Scale Miners (GNASSM) and some think tanks, especially the African Centre for Energy Policy (ACEP), called for the three per cent to be scrapped because it had led to the smuggling of gold out of the country.

Following the concerns, the Ministry of Lands and Natural Resources began engagements with the Ministry of Finance on a possible scrap of the tax.

2022 Budget

When the Minister of Finance, Mr Ken Ofori-Atta, presented the 2022 Budget Statement and Economic Policy of the government to Parliament last Wednesday, he announced a review of the withholding tax policy on gold export.

In the budget statement, Mr Ofori-Atta mentioned a reduction by half, the withholding tax on the sale of unprocessed gold from three per cent to 1.5 per cent.

That was part of the fiscal policy measures the minister proposed for the consideration and approval of Parliament to underpin the 2022 budget and to support the fiscal consolidation and growth agenda of the government.

Describing the theme of the 7th GMIA : "Positioning Ghana as a mine support service hub in West Africa" as apt, Mr Jinapor reiterated the government's commitment to remove bottlenecks in the gold value chain to create an enabling environment for responsible mining in the country.

He said the theme for the event was in line with the government's broad vision to make Ghana the mining hub of Africa "where all mine and mine-related activities, from exploration to refining, from research to innovation, will thrive."

He said the government's focus was to build a competitive mining value chain in the country and make the industry beneficial to the local economy by promoting local content participation.

The minister observed that the best way forward to achieving that objective was for strong collaboration among the stakeholders in the mining industry.

GCM commended

Mr Jinapor commended the GCM for the strong leadership it had provided for players in the mining industry and the partnership the chamber had fostered with mining sector agencies to promote the industry.

He said through the GCM's partnership with the Ministry of Lands and Natural Resources and the Ghana Police Service, security had been beefed up at all mining sites.

Again, he said the partnership had resulted in the setting up of a taskforce comprising mining sector regulators and security persons to protect the mining companies and respond swiftly to challenges they might encounter.

Responsible mining

For his part, the President of the GCM, Mr Eric Asubonteng, said the chamber was focused on providing leadership for mining companies to mine responsibly so as to help build a sustainable economy.

He also said the chamber would deepen collaboration with state regulatory agencies and support the government's agenda to build a robust mining industry in Ghana.

Mr Asubonteng said the mining industry accounted for 49.4 per cent of the country’s gross merchandise in 2020, which was an indication that the sector played significant role in the stability of the economy.

However, he observed that the mining industry in the country still had a long way to go to fully realise its potential, which was why GCM had taken the initiative to help achieve that feat.

Given that safety was a crucial requirement for the success of mining companies, he said the GCM was guiding mining firms to adhere strictly to safety regimes with the vision to achieve zero harm at mine sites.