PRESENTATION on Royalties Information Sharing Workshop,2011 by anamaulida

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									    INFORMATION SHARING WORKSHOP
                    14 MARCH 2011

SAFARI HOTEL AND CONFERENCE CENTER,
                         WINDHOEK
 Definition or concept of royalties differs across
countries – Royalties are not taxes!

Royalties are administered In terms of Minerals
Act 33, 1992 and are paid by any holder of a claim
and mining licence as a compensation fee for
resource depletion

Royalties are paid to office of the Mining
Commissioner
GROUNDS FOR PAYMENT OF ROYALTIES

 To generate revenue for the benefit of State Revenue Fund


 within the provisions of the Act because all mineral rights are
    vested in the state.

     Mineral rightholders – have an obligation to pay royalties

     State - has an obligation to collect royalties
The current applicable rates are the following:



Group of Mineral        % of market value of   Holder
                        minerals leviable as
                        royalty
Precious metals                    3%                   Any

Base and rare metals               3%                   Any

Industrial minerals                2%                   Any

Semi-precious stones     2%
The two gazettes are used concurrently!                Any

                                   3%                   Any
Nuclear fuel minerals              6%          Rössing Uranium
                                               Mine Ltd.
Non- nuclear fuel                  2%                   Any
minerals
a) Precious stones: on or before the date of sale or
   disposal of such minerals
b) Dimension stone: on or before 30 days after end of
   six months as from the date of issuance of export
   permit.
c) Rest of minerals: (b) applies and as long as feasible
   before the six months period expires.
 Ministry’s Account: account no. 165003 at Bank of
   Namibia, Windhoek
 Royalty Payment can also be made in cash or a
   cheque form over the Counter at the Ministry’s 2nd
   Floor ( a cheque limited to an amount of N$500 000
   only) is acceptable
Section 114 makes provision for allowable deductions to be
considered when paying royalties such as:

i.     Transportation cost ( freight, road, rail, sea)
ii.    Harbour and storage fees
iii.   Handling charges
iv.    Insurance fees

      Costs other than those prescribed will not be considered

      A sufficiently completed“ Royalty Payment Schedule” to
       be utilised when paying royalties is compulsory

      Supporting documents of allowable deductions specified
       and sales invoices to be attached and furnished to office
       of Mining Commissioner together with the Royalty
       Payment Schedule. ( applies to samples)
FAILURE TO PAY ROYALTIES

 Section 115 & 117 makes provision for the imposition of penalties
     and actions to be taken:

1.     Penalties calculated at a rate of 1/3 of 1% times total no. of
       late days on the royalty amount due ( 1/300*Late days*R)
2.     Conviction liable to a fine or imprisonment

      Please pay on time to avoid these actions!
Arises in case of discrepancies and suspicions
in figures declared

If it is found that there are
misunderstandings here and there in terms of
compliance

It is a costly exercise thus should be avoided
where possible!
CHALLENGES
 Non-compliance with provisions of the Act by some mining
    companies and claim holders:
i.    Unprecsribed allowable deductions
ii.   Royalty liabilities passed on to MRH’s clients
iii. Inflated transportation costs.
iv. Unreasonable Late payments of both royalties and penalties
v.    Non completion of the Royalty Payment Schedule
vi. Suspicious and discrepancies on volumes and values of mineral
      commodities declared on royalty payment Schedule – under-
      estimating of royalties
vii. Calculation errors – underestimating / over-estimating of
      royalties
     Transfer- Pricing Agreements
     Use of export permits as a reason for royalty payment
     Limited staff, budget and time constraints to conduct
      verification exercises.
CONCLUSION

 We urge you to pay on time, accurately and consistently

 We hope to have the Minerals Bill finalised soon in order to
  effectively implement our obligations

 We wish to further strengthen our existing relationship with the
  industry and achieve excellent service delivery

 Always feel free to contact our office for any assistance.

 Our Office Tel: 284 8111
 Our website: www.mme.gov.na
 Email addresses: mauene-gahutu@mme.gov.na /
  hitamba@mme.gov.na
     MANY THANKS



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