Section 16, The Finance Act, 2016

The Income Tax Act, 2000 is amended by insertingimmediately after the Fifth Schedule the following new Schedule– “SIXTH SCHEDULE (Section 21) MINING SECTOR 1. The rate of tax applicable to companies under section 21 for the year of assessment commencing 1st January 2016 shall be thirty percent. 2. The rate of capital allowances– (a) on expenditure under section 43 (start-up costs) on mineral and petroleum prospecting and exploration shall be one hundred percent; and (b) on production rights and other expenditure incurred on mineral and petroleum development shall be– 15 5A 170(1). 17 4. of Part 1 of First Schedule. of fifth No. 6 Finance Act 2016 No. 6 Finance Act 20168 9 (i) an initial allowance of forty percent of cost in the year of expenditure; and (ii) an annual allowance of twenty percent of cost for each of the three years succeeding the year of expenditure. 3. The rate of withholding tax to be paid by taxpayers under section 21 shall be– (a) on interest to residents ........................................ 10 percent (b) on interest to non-residents ................................ 15 percent (c ) on interest to affiliates ......................................... 15 percent (d) on interest to non-affiliates including recognised financial institution .............................................. 5 percent (e) on dividends to residents .................................... 10 percent (f) on dividends to non-residents ............................. 10 percent (g) on rents .............................................................. 10 percent (h) on royalties and natural resource payments ......... 25 percent (i) on payments to resident contractors ...................... 5 percent (j) on payments to non-resident contractors who are not party to a double taxation avoidance agreement with the Government of Sierra Leone ..... 5 percent (k) on pensions and annuities under section 121(2) ... 15 percent (i) on payments to non-resident contractors who are (resident of a country which is) party to a double taxation avoidance agreement with the Government of Sierra Leone ... 10 percent 4. If the holder of a small-scale mining licence or a large scale mining licence does not maintain audited accounts pursuant to subsection (3) of section 69, then the licence holder shall pay a minimum income tax of three and one half percent of turnover. 5. (a) Subject to paragraph (b), a loss in any year of assessment may be carried forward as a deduction against income of the subsequent year of assessment. (b) Accumulated losses can be carried forward up to a maximum of ten years from the date of commencement of commercial production. 6. Where a deduction for head office expenses exceeds onehalf percent of sales, any excess of such expense shall be treated as a dividend under section 85. 7. Where a deduction for interest payable on loans is prohibited because the total debt of the paying company exceeds three times the total equity and where interest payments exceed fifty percent of income before capital allowances, any amount disallowed shall be treated as dividend under section 85. AMENDMENT OF THE GOODS AND SERVICES TAX ACT, 2009