Monday, 24 June 2013

MPs pass royalty Bill on minerals


Miners inside a tunnel in Rulindo District. 
The Bill establishing a royalty on Rwanda’s precious stones and metals has been passed. The Bill is meant to ensure fair sharing of the country’s natural resources.

While presenting her committee’s report to the House before the Bill was passed last week, MP Constance Rwaka Mukayuhi, chairperson of Parliament’s Standing Committee on Budget and National Patrimony said it would ensure that the country’s natural wealth is able to support and benefit the citizens.

According to Article 4, royalty rates on minerals are fixed as follows: 4 per cent of the norm value for base metals and other mineral substances of that kind; 6 per cent of the norm value for gold and other precious metals of that kind; and 6 per cent of the gross value for diamonds and other precious stones of that kind.

“When scrutinising the Bill, we looked at study results at hand and paid attention on how the royalty rates on minerals were fixed. The taxes won’t be set up arbitrary. It is also important to understand that just like it is with coffee, mineral prices are determined by the international market,” Mukayuhi said.

She was reacting to the chairperson of the Public Accounts Committee (PAC), MP Juvenal Nkusi’s concern that a high royalty might not spur growth as hoped, but probably deter potential investors.

Nkusi said: “My take is that these taxes are still high. And, there have been such experiences – this won’t be the first time, especially in African countries. I am still worried about the mineral sector.”

Minister of Finance, Amb. Claver Gatete, stressed that Article 8 stipulates that the royalty on minerals is due at the date of exportation of minerals, and the date of Customs Export declaration is considered for the purpose of this Law as the date of export.

Amb. Gatete said sellers will not be obliged to pay royalty before they sell.

“Again, before putting up those rates, we looked at prices all over the world. We started from the region, then all Africa, and then further beyond. The rates we decided on are the lowest. This is why, even the people involved in the sector, automatically accepted when we discussed these things with them,” Amb. Gatete said.

Mukayuhi added that there would be no need to kill competition just so as to get taxes.

“Everything must be considered – we want taxes but we don’t want to kill the tax base. There should really be no worries and, we should also not forget our need for self reliance. All angles were examined. Please understand that royalties must be established,” she said.

The Bill defines norm value to include the monthly average London Metal Exchange cash price per internationally recognised measuring unit multiplied by the quantity of the metal exported certified by the Ministry in charge of minerals.

 It could also be the monthly average Metal Bulletin cash price per internationally recognised measuring unit multiplied by the quantity of metal exported certified by the Ministry in charge of minerals.

The gross value is the export value, while market value means the estimated amount for which a certain mineral would be exchanged competitively between a willing buyer and a willing seller in a transaction where both acted basing upon all the details relating to such minerals knowledgeably, prudently, and without compulsion.

According to the Bill, the paid royalty on minerals shall be deducted from income tax.

Exemption of royalty on minerals

Article 7 also stipulates that any person who exports samples of minerals for trial purposes, analysis or any other examination on quantity as approved by the ministry in charge of minerals is exempt from royalty on such minerals.


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