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Fiscal Regime and Commercial Legislation

The Ghana Government acquires 10% free equity in any mining venture and has the option to acquire an additional 20% participatory interest at fair price. In addition to this, the holder of a mining lease is required to pay royalty of between 3% and 12% on the total revenue of the minerals obtained from the mining operations.

The holder is required to pay income tax at the rate of 35% and an additional Profit tax of 25% as provided under the Additional Profit tax Law 1985 (PNDCL 122). A mining lease holder is also required to pay annual rental charges as prescribed by Regulations.

The above taxes may be decreased by the following capital allowances:

(i) Depreciation 75% of the capital expenditure incurred in the first year of investment and 50% of the declining balance in subsequent years. (ii) Investment allowance of 5% in the first year only. (iii) Losses in each financial year not exceeding the value of the capital allowance for the year may be carried forward. Capitalisation of all pre-production expenses approved by the authorities when the holder starts development of commercial mining.

The holder of a mining Lease is also granted the following benefits:

(i) Exempted of staff from out of Ghana payments of income tax relating to furnishing accommodation at a mine.  (ii) Exempted of staff from out of Ghana payments of income tax relating to furnishing accommodation at a mine.  (iii) Immigration quota for expatriate personnel free from any tax imposed by government for the transfer of foreign currency out of Ghana. (iv) Exempted from the selective alien employment under the selective alien employment decree.

Ghana's Minerals and Mining Act 2006, Act 703 have added some significant aspects to the country's commercial law, and, according to the Mining Journal, they are:

(i) Expenditure on exploration and development may be capitalised in accordance with regulated amortisation provision for tax relief;  (ii) Capital allowances have been designed to shorten the pay-back period and include 75% write off of capital in the first year and 50% annually thereafter on a declining balance; (iii) Retention of a proportion of revenue in foreign currency account for use in acquiring essential equipment and spare parts required for mining operations which would otherwise not be readily available without the use of such earnings; (iv) Exemptions from import duties on imported plant and equipment.