Miners face a potentially hefty increase in royalties
SARS’s latest interpretation of the rules on how royalties are calculated imposes onerous compliance conditions that critics say are impossible to meet
Mining companies face a significant increase in the royalties they pay if the taxman’s current interpretation of the Mineral and Petroleum Resources Royalty Act carries. Originally, gross sales — which are the basis for calculating mining royalties — were meant to exclude the costs for the transport, insurance and handling of minerals that miners pass on to their customers. But the South African Revenue Service’s (SARS’s) interpretation of the law, in a draft binding general ruling, is that companies must prove exactly what costs relate to each transaction. Tax practitioners say this an onerous and impracticable requirement that does not take into account the way mineral sales contracts are drawn up. SAIT says in its submission to SARS that it is "wholly uncommercial" for mining companies to split their prices in agreements and on their invoices to show the details of the delivery terms. It can affect their international competitiveness. In other words, SARS now expect of taxpayers ...
Would you like to comment on this article?
Sign up (it's quick and free) or sign in now.
Please read our Comment Policy before commenting.
Subscribe now to unlock this article.
Support BusinessLIVE’s award-winning journalism for R129 per month (digital access only).
There’s never been a more important time to support independent journalism in SA. Our subscription packages now offer an ad-free experience for readers.
Cancel anytime.
Questions? Email helpdesk@businesslive.co.za or call 0860 52 52 00. Got a subscription voucher? Redeem it now.