royalties get green light
22 August 2008

The National Assembly on Thursday approved the Mineral and Petroleum Resources Royalty Bill which proposes to tax a portion of the profit of minerals and oil extraction companies.

According to the measure, companies will, depending on the profitability of the mine, pay anything from 1.7 percent to 7 percent of their earnings before interest and tax, to the state.  Addressing the National Assembly during a debate on the measure, Finance Minister Trevor Manuel said the bill would ensure that all citizens benefited from the country's mineral resources.

"It lays a foundation to ensure that the mining industry transforms and benefits (a) larger section of our citizens," he said.  While communities currently receiving royalties from mining companies would not be affected by the new legislation, companies paying communities royalties would not be exempted from paying the proposed tax.

"These community royalties will not be allowed as an offset against royalty payments to the state," Manuel said.  The Democratic Alliance welcomed the measure, saying the Bill would ensure a fair and equitable distribution of payments to communities as well as the state.

Sapa,  http://business.iafrica.com