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: email@example.com / firstname.lastname@example.org MANY THANKS Any Question, Comment,…..?
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