RE: Oak Bloke summary13 Nov 2024 23:07
Fiscal Incentive Regime
Corporate Income Tax
Under the key incentive provisions of the Industrial Development (Income Tax Relief) Act (IDITRA”) and the Mining Act, the Project would benefit from a 5 year tax holiday followed by an accelerated capital allowance of 95% of mining expenditure. Following this period, the Project would be subject to standard Corporate Income tax of 30% on total profit.
Pioneer Status
The Mining Industry in Nigeria has been granted “Pioneer Status” which in accordance with the provisions of the IDITRA, provides for the grant of a tax holiday for a period of 3 years which may be extended at the end of the initial 3 years for a period of 1 year and thereafter for another period of 1 year or for one period of 2 years upon satisfactory compliance with certain conditions.
Other Key Incentives
Free transferability of currency, remittance of foreign capital and an exemption from import duties.
Minerals exported from Nigeria are zero rated based on the provisions of the VAT Act.
Royalty
Royalties are payable by companies engaged in mining activities in Nigeria. Royalties are calculated on an ad valorem basis. The applicable royalty rates range from 3%-5% depending on the type of mineral (Gold is 3%). The Minister may grant a concession to a mineral titleholder to defer payment of royalty on any mineral for a specific period, subject to the approval of the Federal Executive Council.
For the PFS, including the formulation of the Mineral Resources and Mineral Reserves it has been assumed that the project will qualify for a government royalty concession.
Other Taxes
Nigerian companies engaged in mining activities are liable to education tax at the rate of 2% of their assessable profit. The educational tax is not applicable during the Pioneer tax holiday.
An impost in terms of the Industrial Training Fund Levy has been included which has been levied at the rate of 1% of the amount of the annual pay roll levy
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