Section 5, No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018

(1) Subject to subparagraph (4), all capital allowance expenditureincurred in respect of petroleum operations during a year of assessment is placed in a separate pool. (2) Capital allowances are granted with respect to each pool at the rates provided for in subparagraph (3). (3) Capital allowances shall be granted for expenditure pooled under subparagraph (1) for a year of assessment at the following rates: Year of Assessment Amount of Capital Allowance In which expenditure incurred 40% of expenditure Second Year 20% of expenditure Third Year 20% of expenditure Fourth Year 20% of expenditure (4) Capital allowances shall be granted for amounts included in the adjusted cost base of a petroleum right (including by reason of a reacquisition under section 27 and bonus payments) according to the following rules: (a) each amount is allocated proportionately over the years of assessment from the year in which the amount is incurred until the year in which the term of the right expires; and (ii) used directly in the same separate petroleum operation from which the petroleum is obtained. (5) In this paragraph, “crude oil” and “natural gas” have the meanings given in section 1 of the Petroleum (Exploration and Production) Act, 2011. Market Value of Petroleum 2. (1) Subject to subparagraph (2), the market value of petroleum- (a) shall be determined in accordance with the method prescribed in the petroleum agreement, but (b) shall not be less than the sale value receivable in a transaction meeting the requirements of section 95 of the Income Tax Act, 2000 (arm’s length standard) without discount, commission or deduction. (2) Where- (a) a petroleum right holder enters into a contract for the supply of natural gas obtained under the right; and (b) the gas is to be supplied under the contract over a period exceeding one year, the market value of the gas supplied shall be determined in a manner that is consistent with subparagraph (1)(b) and the method for determining the market value may be agreed with the Commissioner General, in consultation with the Minister responsible for the management of petroleum matters, by way of an advance pricing agreement issued as a private ruling under section 168 of the Income Tax Act, 2000. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 5 “financial gain” has the meaning given in subsection (5) of section 35 of the Income Tax Act, 2000; “foreign exchange instrument” has the meaning prescribed by regulations and, in the absence of regulations, takes its meaning from generally accepted accounting principles; “generally accepted accounting principles” means the International Financial Reporting Standards; “large-scale mining licence” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “licence area” means– (a) with respect to mineral operations, the area covered by the mineral right in question; and (b) with respect to petroleum operations, has the meaning given in section 1 of the Petroleum (Exploration and Production) Act, 2011; “mineral” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “mineral operations” means exploration operations, mining operations or reconnaissance operations conducted with respect to a mineral right; “mineral right” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “mining area” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “mining licence” means an artisanal, small-scale or large-scale mining licence granted under the Mines and Minerals Act, 2009; “exploration licence” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “exploration licence area” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “exploration operations”– (a) with respect to a mineral right, has the meaning given in section 1 of the Mines and Minerals Act, 2009; and (b) with respect to a petroleum right, means exploration within the meaning given in section 1 of the Petroleum (Exploration and Production) Act, 2011; “extractive industry agreement” means an agreement concluded with- (a) the holder of a mineral right that pertains to a licence granted under section 23 of the Mines and Minerals Act, 2009; or (b) the holder of a petroleum right that pertains to a permit or licence granted under sections 23 (reconnaissance permit), 41 (petroleum licence) or 76 (pipeline permit) of the Petroleum (Exploration and Production) Act, 2011; “extractive industry producer” means a person engaged in `mining under a mining licence or production activities under a petroleum licence, but excludes a person exempt from mineral resource rent tax; “financial cost” has the meaning given in sub section (5) of section 35 of the Income Tax Act, 2000; No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 SECOND SCHEDULE - PETROLEUM Part I: Royalties (Section 21) Royalty Rates 1. (1) Subject to this paragraph, the royalty rates referred to in section 21 shall be as follows- (a) for crude oil - 10%; and (b) for natural gas - 5%. (2) Where the Ministers responsible for finance and for management of petroleum matters agree that the application of the rate of royalties under subparagraph (1) to petroleum obtained from particular petroleum operations make or would make those operations uneconomic, the Ministers may recommend a reduced rate of royalty, but not below 80% of the rate specified in subparagraph (1). (3) Where Parliament ratifies a recommendation under subparagraph (2), the royalty rate referred to in section 21 with respect to the separate petroleum operation is the rate recommended. (4) The following are exempt from the payment of royalties: (a) samples of petroleum obtained for assay, analysis or other examination or testing, but royalties shall apply if a sample is sold; and (b) petroleum that, with the approval of the minister responsible for management of petroleum matters, is- (i) flared or vented in connection with petroleum operations; or (b) the capital allowance for each year is the amount allocated to that year. (5) Capital allowances granted with respect to a particular year of assessment shall be taken in that year and cannot be deferred to a later year of assessment. (6) Where an asset for which capital allowances has been granted under this paragraph is disposed of (or deemed to be disposed of) during a year of assessment- (a) if the consideration received for the disposal exceeds the written down value of the asset, the excess shall be included in calculating chargeable income from the petroleum operations for the year; (b) if the written down value of the asset exceeds the consideration received for the disposal, an additional capital allowance shall be granted for the year in an amount equal to the excess; and (c) the relevant pools referred to in subparagraph (1) shall be reduced by the written down value of the asset. (7) Where more than one separate petroleum operation is conducted with respect to the same petroleum right, allowances granted with respect to the right and inclusions in income with respect to the disposal of the right shall be apportioned between the separate petroleum operations. (8) The apportionment mentioned in subparagraph (7) shall be as prescribed by regulations (with consultation of the PD) and in the absence of regulations on the basis of the market value of the part of the petroleum right used in each separate petroleum operation at the time the allowance is granted or the inclusion in income, as the case requires. (9) In this paragraph- No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 “production activities” with respect to petroleum operations has the meaning given in section 1 of the Petroleum (Exploration and Production) Act, 2011, but excludes processing of petroleum; “reconnaissance licence” has the meaning given in section 1 of the Mines and Minerals Act, 2009; “reconnaissance operations”– (a) with respect to a mineral right, has the meaning given in section 1 of the Mines and Minerals Act, 2009; and (b) with respect to a petroleum right, means “reconnaissance” within the meaning given in section 1 of the Petroleum (Exploration and Production) Act, 2011; “relevant financial cost” and “relevant financial gain” mean– (a) a derivative or foreign exchange instrument; or (b) a financial cost or a financial gain, respectively, with respect to a debt claim or debt obligation denominated in a currency other than that in which the person accounts for the purposes of this Act, but excluding the payment or receipt of standard interest; “revenue” means revenue within the meaning given in section 2 of the National Revenue Authority Act, 2002 that is imposed with respect to a revenue law; “revenue law” means a law referred to in the First Schedule to the National Revenue Authority Act, 2002 including a treaty affecting such a law; (2) The income tax for mineral operations for a year of assessment shall be calculated by applying the rate set out in paragraph 5 of the First Schedule to a person’s chargeable income from mineral operations for the year and if the person has other chargeable income, that income shall be charged at the appropriate rate under the Income Tax Act, 2000. (3) For the purposes of calculating a person’s chargeable income from mineral operations- (a) each separate mineral operation shall be treated as an independent business and the person shall prepare accounts for that business separate from any other activity of the person; and (b) the person shall calculate chargeable income, loss and income tax liability for the business independently for each year of assessment. (4) Section 95 of the Income Tax Act, 2000 shall apply– (a) to arrangements between a separate mineral operation and other activities of the person conducting the mineral operation (including other mineral operations or processing operations of the person); and (b) as though the arrangements were conducted between associated persons. (5) Pursuant to subsection (4), the transfer of an asset to or from a separate mineral operation shall be treated as an acquisition and disposal of the asset. (6) Where two or more persons hold a mineral right, they shall calculate their chargeable income from mineral operations with respect to the right separately, but do so as though they were associated persons. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 “separate mineral operation” has the meaning given in section 5; “separate petroleum operation” has the meaning given in section 23; “service fee” has the meaning given in section 117 of the Income Tax Act, 2000; “special stones” means a precious stone with a market value above 500,000 United States Dollars; “underlying ownership or control” has the meaning given in section 2 of the Income Tax Act, 2000; and “year of assessment” has the meaning given in section 2 of the Income Tax Act, 2000. (2) To the extent that a term used in this Act is not otherwise defined, the term shall have a meaning in this Act that is consistent with any meaning given to that term in the Income Tax Act, 2000. (3) Subject to this Act, no law, whether enacted before or after the commencement of this Act, shall be interpreted so as to provide an exemption from royalties, income tax, mineral resource rent tax or petroleum resource rent tax as provided for in this Act. 2 (1) This Act shall apply to certain operations authorised by mineral rights and petroleum rights issued under the Mines and Minerals Act, 2009 and the Petroleum (Exploration and Production) Act, 2011. (2) This Act shall extend to a person conducting unauthorised operations that should be conducted under a mineral right or petroleum right. Unauthorised Operations (3) Subsection (2) applies notwithstanding any consequences under the Mines and Minerals Act, 2009 and the Petroleum (Exploration and Production) Act, 2011 by reason of the person conducting unauthorised operations. PART II–MINES AND MINERALS 3. (1) The holder of a mineral right shall pay royalties for minerals obtained pursuant to the right. (2) The royalties referred to in subsection (1) shall be calculated by applying the relevant rates set out in paragraph 1 of the First Schedule to the market value of the minerals obtained as determined under paragraph 2 of the First Schedule. (3) The holder of a mineral right shall pay royalties at the time prescribed in paragraph 3 of the First Schedule and in accordance with the procedure outlined in Part V. (4) Notwithstanding other provisions in this Act, the Minister responsible for finance may, in consultation with the Ministry responsible for mines and mineral resources, prescribe by statutory instrument special rules with respect to precious stones and special stones obtained under an artisanal mining licence for the purposes of- (a) determining the market value of the stones; (b) setting arrangements as to the time and method of collection of royalties, including collection from dealers and other third parties. 4. (1) A person conducting mineral operations shall be subject to income tax with respect to operations under the Income Tax Act 2000 and this Act. Royalties Income ta x No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 201860 PART II: INCOME TAX (Sections 4 and 7) Income Tax Rate 5. The income tax rate for mineral operations shall be 30%. Capital Allowances