Nigeria offers Tax Holiday to new mining firms
The Federal Government has approved a three-year tax holiday for new mining companies as part of incentives to attract investments to the sector, the News Agency of Nigeria (NAN) has reported.
The Minister of Mines and Steel Development, Mrs Diezani Alison-Madueke, made this known yesterday in Beijing at an investment forum.
She said the tax holiday was to enable the companies stabilise for a period of three years before "they start paying tax, beginning with the accumulated three year tax".
The minister, who described the Nigerian solid minerals sector as a virgin territory, listed other new investment friendly legislations and policies to include the reduction of company tax from 35 per cent to 30 per cent and capital gain tax from 20 per cent to 10 per cent.
Other incentives are exemption from payment of import duty in respect of mining-related plant, machinery and equipment as well as remittance of foreign capital in the event of sale or liquidation of mining operations.
Alison-Madueke also said that the government had put in place institutional and policy changes to reposition the sector, noting the change from "Owner-Operator to Administrative-Regulator" and the strengthening of the ministry's agencies to carry out their mandate.
She also said the ministry, in collaboration with other agencies, was developing a one-stop shop "as a strong response to investors complaints on bureaucratic delays".
The minister said under the plan, issues such as environmental impact assessment, taxation, work permit and immigration would be addressed uniformly.
In his remarks, Mr Craig Bond, the Chief Executive Officer of Standard Bank, the organisers of the forum, said the bank would collaborate with its sister company, Nigeria 's Stanbic IBTC Bank, to offer project finance and technical skills to businessmen willing to invest in Nigeria.
"Through Stanbic IBTC Nigeria, we will offer project finance and technical skills, while Standard Bank will provide the majority of capital needed for the big projects as Chinese investors come into Nigeria," he said.
Bond said that the bank would also offer assistance to indigenous mining groups, noting that "mining is a capital intensive venture".
He said Chinese businessmen were keen on investing in Nigeria but thought that the country was mainly a mono-product economy with over dependence on oil.
"The minister's visit has assured them of the huge potentialities that abound in the solid minerals sector," he added.
The Miners Association of Nigeria recently said illegal mining had declined by 30 per cent compared to previous years.
National President of the Association, Mr Sunday Ekosin, said the development followed a renewed commitment by the association and the Ministry of Mines and Steel Development to integrate illegal miners into the main stream.
Ekosin, who said the move had to "a large extent" successfully led to formalising illegal mining operations, noted that it would be a herculean task to completely eradicate it.
According to him, the solid minerals industry is experiencing a "hard time" as it is fast on the decline and contributing poorly to the nation's GDP.
The Federal Government of Nigeria (FGN) and the World Bank had in 2004 negotiated $120 million assistance for the development of the solid minerals sector in the country.
The project, which began implementation during the president Olusegun Obasanjo administration, was targeted at increasing government's long-term institutional and technical capacity to manage Nigeria's mineral resources in a sustainable way.
It was also aimed at establishing a basis for poverty reduction and rural economic renewal in selected areas of the country via the development on non-farm income generating opportunities through small-scale and artisan mining and diversification away from oil sources of income.
Known as Sustainable Management of Mineral Resources Project, the credit is to be repaid for over 35 years including a 10-year grace period with no interest charged. It will however attract a service charge of 0.75 per cent on the principal balance not withdrawn and a commitment charge of 0.35 percent.
The project was also to enable mining companies have access to credit by working with banks to mitigate risk on lending to miners.
There was also be matching grants and advisory services provided for the miners.
The project helped to assist government in drafting a new Minerals Act to replace the 1999 Minerals Act, assisted in facilitating the establishment of a Mining Cadastre (Registry) for easy issuance of mining permits in a transparent manner and also produced basic and reliable geological map with complete information on the solid mineral potentials that cover the entire country.