Prioritise Review of VAT on Exploration, Lands Minister Advises Next Gov’t
The Minister for Lands and Natural Resources, Samuel Abu Jinapor, has called on the next government to prioritize repealing or reviewing the Value Added Tax (VAT) on exploration to secure the future of mining in Ghana.
The Ghana Chamber of Mines (GCM) has consistently urged for the exemption of exploration companies from paying VAT on drilling and laboratory services. Currently, VAT on exploration expenses cannot be reclaimed unless the companies make a commercial discovery and commence production.
With exploration being critical to sustaining mineral production and state revenues, the ongoing decline in exploration investments poses a significant threat to the sector. Incentivizing exploration by abolishing or revising the VAT is seen as a vital step to ensure the industry’s growth and sustainability.
Speaking at the Ghana Mining Industry Awards, organized by the GCM, Mr. Jinapor emphasized the importance of addressing this issue.
He stated, “The next government must take the issue of Valued Added Tax (VAT) on exploration very seriously, and work closely with the Chamber to find a way of dealing with this matter. This issue is very dear to us all, and indeed, to the Vice President of the Republic, Dr. Mahamudu Bawumia; for we are aware that exploration is the lifeblood of the mining industry, and, therefore, incentives must be given to encourage exploration.”
Mr. Jinapor noted that he had led the Chamber to present the matter to the Economic Management Team and was working toward a resolution. However, due to the current challenges in Parliament, progress is unlikely before year-end. He urged his successor to prioritize this matter, expressing hope that the Chamber would collaborate with future leadership to ensure its resolution.
Chamber excited
According to the Chamber’s CEO, Dr. Sulemanu Koney, they are quite excited about the news of a review of VAT on exploration as it will help sustain the industry.
He told Business24/Investment Times on the margins of the awards programme, “I think it is an important part of the mining industry[exploration]. It is only through exploration that you can lengthen the life of a mine, that you can be assured that a mine would continue to run, unfortunately, exploration is quite expensive in our country, and very risky as well and we don’t want the situation where investors hard-won capital would be charged taxes, our view is that we should lower the barrier for entry for the exploration companies to come in -once they come in they make a commercial find, they start production and then they will pay their taxes.
But with the current situation when an investor has his money, he comes into this country or decides to do exploration, quickly what it means is that practically every input that goes in there you have to pay VAT and we don’t believe it is the right thing to do because exploration is so important, we want to lower the cost and the risk of exploration to improve and grow the mining industry pipeline and so we are quite excited about it.”
The Ghana Mining Industry Awards (GMIA) takes place every year with the aim of fostering, endorsing, acknowledging, and commemorating significant achievements and outstanding performance within the mining sector.
These awards recognize exceptional individuals and organizations for their notable contributions to the advancement and prosperity of Ghana’s mining industry.
AngloGold Ashanti Iduapriem Mines was adjudged the best mining company at this year’s awards.
