Kigali, Rwanda — Rwanda's Parliament is in the process of discussing a bill whose success will lead to introducing a new tax that will see all minerals paying a fixed amount for loyalty.
The tax bill was tabled before the Lower Chamber of Parliament last year by the Finance Ministry arguing that, Rwanda was not exploiting enough of their mineral wealth and could earn more if a new tax was introduced.
The bill proposes loyalty tax rates on mines to be fixed at four percent of the standard value of basic metals and other minerals while six percent levy is proposed on the standard value of gold and other precious metals. The bill also talks of a six percent levy on the gross value of diamonds and other precious stones.
The mining sector is one of Rwanda's major revenue sources as it resulted in receipts worth over $150 million in 2011 and estimated to employ over 30,000 people.
Rwanda's Minister of Natural Resources was quoted in July lamenting to parliament that government was not getting enough in form of tax revenue from the mines considering the size of the industry.
But while Celestin Bumbakare, the Commissioner for Domestic Taxes at Rwanda Revenue Authority (RRA) insists the tax should not be considered as a burden to the private investors as it's 'essential for improving business in a country's exhaustible resources' several investors are in rue over it.
The miners say they are already paying several other fees to district administrations, to Geology and Mines Department (GMD) and fees for tagging minerals on top of high costs of extracting minerals.
A source revealed to the EABW that miners are working on a joint document to present to the ministry with the aim of negotiating a lower and friendly tariff.
The Value of Rwanda's minerals fell from 67.7% recorded between January and June 2011 to 64.6% in the same period of 2012 indicating a fall of 4.5%.
Rwanda's mining and quarrying sector accounted for only about 0.7% of the gross domestic product according to the mineral industry report of 2010.
Some of the minerals include tantalum, (accounting for 15% of world tantalum mine production in 2010), columbite-tantalite, cassiterite (tin ore), and wolframite (tungsten ore). Though Rwanda does a lot of domestic mining, it also benefits a lot from re-exports from mining operations in the Democratic Republic of the Congo.
The current standoff with the much larger neighbor will most certainly mar those activities affecting the mining sector negatively.
The state-owned Régie d'Exploitation et de Développement des Mines (REDEMI) is the leading public player in the mining sector but several privately owned companies, cooperatives, and artisanal miners also engaged in production.