Section 8, No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018

(1) The uplift referred to in section 13 shall be applied to accumulatednet expenditure for a previous year of assessment in the following manner- (a) in the case of a period of mining operations during the current year of assessment - 12.5% per annum applied to the period; and (b) in any other case - nil. (2) In this paragraph, a “period of mining operations” means a period during which mining operations are conducted under a mining licence, including the period between the granting of a mining licence and the commencement of mining operations if that commencement occurs within 60 days of the grant; but excludes any period during which mining operations are suspended or unreasonably delayed. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 (7) Transfer pricing in accordance with section 95 of the Income Tax Act, 2000 shall apply to subsection (6). 5. (1) Subject to this section, mineral operations pertaining to each mineral right shall constitute a separate mineral operation. (2) The following rules shall apply where a person who holds an exploration licence is subsequently granted a mining licence and the mining area falls wholly within the exploration licence area– (a) mineral operations conducted in respect of the exploration licence to the date of grant of the mining licence shall be treated as conducted with respect to the mining licence and therefore the same separate mineral operation as conducted under that mining licence; (b) from the date of grant of the mining licence, mineral operations conducted with respect to the exploration licence shall be treated as a new separate mineral operation. (3) Where a person who holds an exploration licence– (a) is subsequently granted a mining licence and the mining area falls wholly within the exploration licence area (whether or not prior mining licences have been granted with respect to the exploration licence area); and (b) subsequently (but before any further mining licence is granted with respect to the exploration area) relinquishes all of the exploration licence area (excluding the mining area referred to in paragraph (a) or a mining area under an earlier mining licence), Separate mineral (b) expenditure (other than financial costs) incurred in respect of the mineral operation on the following, but only if it has been expensed in the person’s financial accounts and that expensing is in accordance with generally accepted accounting principles- (i) expenditure on reconnaissance and exploration operations; and (ii) expenditure on waste removal, overburden stripping, shaft sinking and like activities as may be prescribed by regulations; (c) capital allowances granted with respect to the mineral operation and calculated in accordance with paragraph 6 of the First Schedule including with respect to the disposal of an interest in a mineral right; (d) contributions to and other expenses incurred in respect of a rehabilitation fund for the mineral operation as required under the extractive industry agreement or rehabilitation plan approved by the Minister responsible for mines and mineral resources; (e) expenses incurred by that person in the course of reclamation, rehabilitation and closure of a mineral operation, but only to the extent funds in the relevant rehabilitation fund are not yet available or are inadequate; (f) any other amounts incurred by that person during the year directly in the course of the mineral operation that may be deducted under the Income Tax Act, 2000. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 the mineral operations conducted with respect to the relinquished exploration licence area referred to in paragraph (b) from the date the mining licence referred to in paragraph (a) is granted, shall be treated as conducted with respect to the mining licence and therefore the same separate mineral operation as conducted under that mining licence. (4) The following rules shall apply where a person who holds a reconnaissance licence is subsequently granted an exploration licence- (a) the mineral operations conducted with respect to the reconnaissance licence to the date of grant of the exploration licence shall be treated as conducted with respect to the exploration licence and therefore the same separate mineral operation as conducted under that exploration licence; (b) from the date of grant of the exploration licence, mineral operations conducted with respect to the reconnaissance licence shall be treated as a new separate mineral (5) The rule in paragraph (a) of subsection (4) applies for the purposes of applying subsection (2). (6) The Minister responsible for finance, in consultation with the Minister responsible for mines and mineral resources, may by statutory instrument make further provision for the determination of separate mineral operations including with respect to adjacent mineral rights and merging of mineral rights. 6. In calculating a person’s income from a separate mineral operation for a year of assessment the following shall be included- Income from mineral (a) receipts derived or treated under section 95 of the Income Tax Act 2000 as derived during the year from the disposal of minerals obtained from the licence area; (b) compensation received, whether under a policy of insurance or otherwise, in respect of loss or destruction of minerals from the licence area; (c) amounts received in respect of the sale of information pertaining to the mineral operations or mineral reserves; (d) amounts required to be included under section 10 in respect of a surplus in a rehabilitation fund; (e) amounts required to be included under paragraph 6 of the First Schedule, including with respect to the disposal of an interest in a mineral right; and (f) any other amounts derived by that person during the year from or incidental to the operation that are included in calculating income under the Income Tax Act, 2000. 7. (1) Subject to this section , in calculating a person’s chargeable income from a separate mineral operation for any year of assessment the following shall be deducted- (a) royalties, annual charges and rent paid by that person under this Act or the Mines and Minerals Act, 2009 with respect to a mineral right, but not exceeding any liability under the relevant extractive industry agreement; Deductions for mineral No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 201856 (ii) capital allowances at the rates provided for in paragraph 6 of the First Schedule since the amount was incurred (irrespective of whether those allowances were actually granted or claimed); plus (iii) losses carried forward under the Income Tax Act and available for deduction in calculating chargeable income from the separate mineral operation for the commencement year of this Act; and (c) “commencement year of this Act” for a particular person means the person’s first year of assessment that ends after the commencement of this Act. 53. (1) For the purpose of imposing petroleum rent tax, relevant deductible expenditure and relevant gross receipts referred to in section 35 may include amounts incurred or derived prior to the commencement of this Act. (2) The amounts referred to in subsection (1) shall meet the seven year limitation referred to in section 35. PART VII –MISCELLANEOUS 54. The Minister responsible for finance may by statutory instrument make regulations for giving effect to the provisions of this Act. Transitional Mineral ta x Regulations FIRST SCHEDULE - MINES AND MINERALS Part I: Royalties (Section 3) Royalty Rates 1. (1) Subject to subparagraph (2), the following shall be the royalty rates for minerals- (a) 3% for minerals obtained pursuant to an artisanal mining licence; and (b) in the case of minerals obtained pursuant to a mineral right other than an artisanal mining licence- (i) 6.5% for precious stones other than special stones; (ii) 8% for special stones; (iii) 5% for precious metals; and (iv) 3% for other cases, including bulk minerals. (2) Samples of minerals obtained for purposes of assay, analysis or other examination or testing shall be exempt from royalties, but royalties shall apply if a sample is sold. Market Value of Minerals 2. (1) The market value of minerals shall be the sale value receivable in a transaction meeting the requirements of section 95 of the Income Tax Act, 2000 (arm’s length standard) at the time of export, processing or delivery under a contract of sale, whichever is earlier, without discount, commission or deduction: Provided that in the case of precious stones, special stones and bulk minerals the market value shall be determined in accordance with the methods prescribed in the remainder of this paragraph. No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 (ii) the uplift specified in paragraph 8 of the First Schedule for two years applied to the 20 percent amount referred to in subparagraph (i); and (d) for the third year of assessment after the commencement year of this Act– (i) 20 percent of the relevant depreciated historic cost and losses; plus (ii) the uplift specified in paragraph 8 of the First Schedule for three years applied to the 20 percent amount referred to in subparagraph (i). (3) For the purpose of imposing mineral resource rent tax, relevant deductible expenditure and relevant gross receipts referred to in section 17 may include amounts incurred or derived prior to the commencement of this Act. (4) The amounts referred to in subsection (3) shall meet the seven year limitation referred to in section 17. (5) In this section– (a) “historic cost” of an amount incurred by a person means the amount calculated in accordance with generally accepted accounting principles and specified in the person’s audited financial accounts;; (b) “relevant depreciated historic cost and losses” for a separate mineral operation means- (i) the historic cost of all amounts for which capital allowances are available in the commencement year of this Act with respect to the operation; minus (2) The market value for a precious stone shall be- (a) based on the current market prices for wholesale rough precious stones of that nature; and (b) determined as the highest of the values ascribed to the precious stone on evaluation by- (i) the mineral right holder; (ii) the Government evaluators; and (iii) an independent evaluator. (3) The National Minerals Agency shall, for the purpose of determining the market value of precious metals and in consultation with the Ministry of Mines and Mineral Resources, at the end of each week calculate the average price of precious metals exported or sold in Sierra Leone during a week based on spot prices realised at the end of each trading day: Provided that in the case of gold, the weekly average of the London PM Fix price in United States Dollars per fine troy ounce shall be used. (4) Subject to subparagraph (5), the market value of bulk minerals shall be the realised gross price for a sale free-on-board (fob) at the point of export from Sierra Leone or point of delivery within Sierra Leone, as the case requires, provided it meets the requirements of subparagraph (1). (5) Where- (a) a mineral right holder enters into a contract for the supply of minerals (other than precious stones or precious metals) obtained under the licence; and No. The Extractive Industries Revenue Act 2018No. The Extractive Industries Revenue Act 2018 (2) No deduction shall be allowed in calculating chargeable income from a separate mineral operation– (a) under paragraphs (b), (e) and (f) of subsection (1) of section 32 or sections 37, 40, 43 or 44 of the Income Tax Act, 2000; (b) for any amount unless it is incurred in– (i) the acquisition or improvement of a valuable asset used in the operation; or (ii) securing services or facilities for the operation and the amount constitutes income of the recipient that has a source in Sierra Leone in accordance with section 89 of the Income Tax Act, 2000; (c) for an allowable loss under sections 32 and 32A of the Income Tax Act, 2000, except for an allowable loss in conducting the operation as provided for in section 8; (d) to the extent the amount does not comply with section 95 of the Income Tax Act, 2000; (e) for bonus payments; or (f) for excluded expenditure or overriding royalties. (3) In calculating a person’s chargeable income from a separate mineral operation for a year of assessment, relevant financial costs incurred during the year may be deducted only to the extent that relevant financial gains are included in calculating the income. (4) The limitation referred to in subsection (3) shall be in addition to that provided in section 35 of the Income Tax Act, 2000. (a) receiving for the disposal, consideration equal to the market value of the proportion of the right treated as disposed of; and (b) incurring in respect of the reacquisition an equal amount. (3) A company that suffers a change of ownership or control referred to in subsection (1) shall notify the Commissioner- General when it files its next tax return under section 97 of the Income Tax Act, 2000. (4) A company that fails to comply with subsection (3) is liable for a penalty equal to 30 percent of the market value of the interest in the mineral right treated as disposed of under subsection (1). (5) This section shall be without prejudice to direct disposals of mineral rights and the application of section 88 of the Income Tax Act, 2000 to a company that holds a mineral right.