Section 6: RENTS AND TAXES

(a) Mining and Surface Rent—The companies shall pay to the Government annually, in advance, a mining rent at the rate of Le320 (three hundred and twenty) per year for each square mile embraced within the Mining Lease Areas. In addition, the Companies shall pay to the Government annually, in advance, a surface rent for all land occupied or used for the purpose enumerated in Section 35 (1) of the Minerals Act at a rate determined by the President pursuant to such Section 35. The Companies may designate and shall demarcate one or more areas within the Mining Areas, not to exceed two square miles in total area, on which to erect permanent processing and other plant facilities. (b) (1) ROYALTY Beginning as of the date on which the Companies begin Shipments of titanium-bearing and associated minerals from Sierra Leone, the Companies shall pay to the Government a royalty on all such shipments at the following rates: (i) For Rutile (provided that TiO2 contents is not less than 95% Le3 per metric ton up to 30,000 tons. Le5 per metric ton for the next 30,000 tons and Le6 per metric ton for tonnage in excess of 60,000 tons shipped during the Companies accounting year. (ii) Other Minerals (provided that in the case of ilmenite the TiO2 content is not less than 50%). For each other minerals exploited in connection with Rutile the Companies shall pay royalty as provided for in the Minerals Act. If such Royalty is not provided for in the Minerals Act the parties shall agree upon a royalty to be paid. If the extracted mineral-concentrates are shipped from Sierra Leone before separation, so the royalties as defined in the aforesaid paragraph will be assesed by ascertainment of the quantities of each mineral, which are contained in the concentrates at the time of shipment. Samples taken before shipment shall be analysed by an independent analyst on whom the parties shall agree. Copies of the certificate of the analysis shall be made available to the parties. The cost of analysis shall be met by the Companies. (2) Royalty shall not be deducted as an operating expense. (3) On or before the 15th day of January, April, July and October the Companies shall present at the Office of the Director of Mines a statement showing (1) the quantities exported by the Companies No. 21 Bayer Preussag Agreement 1973 (Ratification) 1974 A 149 during the preceding months. Every statement of export shall specify the designations and names and addresses of consignees and shall be accompanied by a certificate from the Comptroller of Customs showing the amount of each exportation. The Companies shall pay the royalty on the amount of titanium-bearing and associated minerals exported during the preceding months at the time of presenting each statement. (c) INCOME TAX The Companies in the conduct of their activities in Sierra Leone pursuant to the provisions of this Agreement shall be liable to income tax upon their income derived therefrom as well as upon any other income accruing in, brought into or received in Sierra Leone in accordance with the provisions of the Income Tax Act (Cap. 273) applicable to companies generally and as may be from time to time amended. (d) The Companies shall, in addition to income tax referred to in paragraph (c) above, be liable to surtax in accordance with the provisions of the Surtax (Temporary Imposition) Act (No. 14 of 1968) as may be from time to time amended and any other taxes with respect to income accruing in, derived from, brought into or received in Sierra Leone in respect of any trade, business, profession or vocation. (e) Notwithstanding the provisions of the immediately preceding paragraphs (c) and (d) the aggregate of all taxes payable by the Companies in respect of any year of assessment shall be an amount equal to fifty per centum of the profits as computed for income tax purposes: Provided, however, that— (i) The amount of profits of the Companies as adjusted for tax purposes in accordance with the provisions of the Income Tax Act (Cap. 273) upon which tax at the appropriate rate is to be levied and paid shall be reduced by the amount of the royalty paid in the basis period of the relevant year of assessment; and (ii) the limitation imposed by paragraph (e) above shall in no way operate to reduce the total amount payable to Government by the Companies in respect of taxes and royalties for any year of assessment below the amount payable as royalty under this Agreement in the basis period relating to such year of Assessment. (iii) any reduction in the aggregate amount of such taxes required to give effect to the provisions of this paragraph shall be effected primarily by a reduction of the amount of surtax payable in such A 150 No. 21 Bayer Preussag Agreement 1973 (Ratification) 1974 year of assessment and if this reduction shall be insufficient, then by a reduction of the amount of income tax payable in such year of assessment. (f) Notwithstanding further that the Companies may apply for and be granted development certificates in accordance with the provisions of the Development Act or otherwise in respect of their trading activities in Sierra Leone pursuant to the provisions of this Agreement— (i) The provisions of the Income Tax Act, except for the provisions of section 28 thereof, shall apply in every other respect; (ii) in the event of the Companies winding-up voluntarily or otherwise or ceasing to carry on the trade or business in Sierra Leone prior to or within three years after the expiration of the tax holiday period, whichever period is the longer, or the development certificate having been cancelled and deemed never to have taken effect it shall be lawful for the Government to recover from the Companies the amount of any taxes on profits of the Companies derived during any of the years of the tax holiday period which would have been otherwise, chargeable with tax if the Companies were not granted development certificate under the Development Act or otherwise. (g) Subject to paragraph (e) (ii) any amount paid by the Companies as royalty in any accounting year relating to any year of assessment shall be deemed to be payment on account of the aggregate liability of the Companies to Sierra Leone income tax, surtax and any other taxes on income arising from the operations of the Companies in Sierra Leone. (h) Net dividends paid, that is after deduction of taxes at source, shall not be subject to any further taxation. (i) No discriminatory tax, duty fee, charge or any other imposition shall be imposed on the Companies and their employees serving in Sierra Leone; for the purpose of this clause, a tax, duty fee, charge or other imposition shall be considered discriminatory if its effect is confined wholly or mainly to the Companies or their employees. (j) The Companies will use their best endeavours to use ships belonging to or chartered by the Sierra Leone National Shipping Company Ltd. for the shipment of their mineral ores and other products, provided that the conditions of shipment by the Sierra Leone Shipping Company Ltd. are competitive. No. 21 Bayer Preussag Agreement 1973 (Ratification) 1974 A 151