The Extractive Industries Revenue Act, no. 2 of 2018

21. Royalties imposed.

22. Income tax.

23. Separate petroleum operations. ARRANGEMENT OF SECTIONS 24. Income from petroleum operations.

25. Deductions from petroleum operations. THE EXTRACTIVE INDUSTRIES REVENUE ACT, 2018 26. Losses from petroleum operations.

27. Indirect disposal of petroleum rights. ARRANGEMENT OF SECTIONS 28. Decommissioning funds.

29. Minimum tax. PART I– PRELIMINARY 30. Petroleum resource rent tax imposed.

31. Accumulated net receipts and accumulated net expenditure.

32. Net receipt and net expenditure. Section. 33. Gross receipts.

1. Interpretation. 34. Deductible expenditure.

2. Unauthorised operations. 35. Year of commencement.

36. Transfer of petroleum rights.

37. Decommissioning fund positive balance. PART II-MINES AND MINERALS 38. Processing.

3. Royalties. PART IV-EXTRACTIVE INDUSTRYAGREEMENTS

39. Obligation to take account of extractive industry agreements

4. Income tax. 40. Approved fiscal stability clause

5. Separate mineral operations. 41. No double benefits under extractive industry agreements

6. Income from mineral operations.

7. Deductions for mineral operations. PART V-ADMINISTRATION

8. Losses from mineral operations. 42. Accounts.

9. Indirect disposal of mineral rights. 43. Assessment of royalties.

10. Rehabilitation funds. 44. Assessment of income tax.

11. Minimum tax and small macro taxpayers. 45. Instalments of mineral and petroleum resource rent tax.

12. Mineral resource rent tax imposed. 46. Assessment of mineral and petroleum resource rent tax.

13. Accumulated net receipts and accumulated net expenditure. 47. General principles of administration.

14. Net receipts and net expenditure. 48. Assistance of officers of public.

15. Gross receipts. 49. Prohibition on disposal of minerals and petroleum.

16. Deductible expenditure. 50. Financial forecasts.

17. Year of commencement. PART VI- AMENDMENTS AND TRANSITIONAL PROVISIONS

18. Transfer of mineral rights. 51. Consequential amendments.

19. Rehabilitation fund positive balance. 52. Transitional mineral resource rent tax.

20. Processing. 53. Transitional petroleum resource rent tax. PART VII- MISCELLANEOUS

54. Regulations. SCHEDULES 70 No. The Extractive Industries Revenue Act 2018 SIGNED this day of July, 2018. HIS EXCELLENCY JULIUS MAADA BIO, Passed in Parliament this day of , in the year of our Lord two President. thousand and Eighteen. LS UMAR PARAN TARAWALLY, Clerk of Parliament. THIS PRINTED IMPRESSION has been carefully compared by me with the Bill which has passed Parliament and found by me to be a true and correct printed copy of the said Bill. No. 2018 UMAR PARAN TARAWALLY, Clerk of Parliament. Sierra Leone The Extractive Industries Revenue Act, 2018 Short title. Being an Act to provide for and coordinate various taxes and charges on extractive industries, the regulation of fiscal aspects of extractive industry agreements and for other related matters. [ ] Date of com- mencement. ENACTED by the President and Members of Parliament in this PRINTED AND PUBLISHED BY THE GOVERNMENT PRINTING DEPARTMENT, SIERRA LEONE. present Parliament assembled. 2 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 3 PART I – PRELIMINARY “decommissioning fund” means a fund established under section 78 of the Petroleum (Exploration and Interpretation. 1. In this Act, unless the context otherwise requires– Production) Act, 2011; “adjusted cost base” of an asset has the meaning “derivative instrument” has the meaning prescribed given in section 2 of the Income Tax Act, 2000; by regulations and, in the absence of regulations, takes its meaning from generally accepted “approved decommissioning plan” means a accounting principles; decommissioning plan approved by the Minister responsible for the management of petroleum “development and operation area” means the area matters; covered by an approved development and operation plan; “approved development and operation plan” means a plan approved under section 55 of the Petroleum “excluded expenditure” means- (Exploration and Production) Act, 2011; (a) income tax, mineral resource rent tax and “approved fiscal stability clause” has the meaning petroleum resource rent tax; given in section 40; (b) bribes and expenditure incurred in corrupt “associate” has the meaning given in section 2 of the practices; Income Tax Act, 2000; (c) interest, penalties and fines payable to a “bonus payment” means a bonus paid on the grant, government for breach of any law or a political transfer or assignment of a large-scale mining licence subdivision of a government of any country; or petroleum licence, but does not include a fee and prescribed by the Mines and Minerals Act, 2009 or the Petroleum (Exploration and Production) Act, 2011 (d) expenditure incurred- or regulations made under those Acts; (i) as a consequence of non-fulfilment of “Commissioner-General” means the Commissioner- contractual obligations under an General appointed under the National Revenue extractive industry agreement or other Authority Act, 2002; agreement with a government or a political subdivision of a government “debt claim” has the meaning given in section 2 of the of any country; or Income Tax Act, 2000; (ii) on insurance, indemnity, guarantee or “debt obligation” has the meaning given in section 2 other security against such non- of the Income Tax Act, 2000; fulfilment; 4 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 5 “exploration licence” has the meaning given in section 1 of the Mines “financial gain” has the meaning given in subsection and Minerals Act, 2009; (5) of section 35 of the Income Tax Act, 2000; “exploration licence area” has the meaning given in section 1 of the “foreign exchange instrument” has the meaning Mines and Minerals Act, 2009; prescribed by regulations and, in the absence of regulations, takes its meaning from generally “exploration operations”– accepted accounting principles; (a) with respect to a mineral right, has the “generally accepted accounting principles” means the meaning given in section 1 of the Mines and International Financial Reporting Standards; Minerals Act, 2009; and “large-scale mining licence” has the meaning given in (b) with respect to a petroleum right, means section 1 of the Mines and Minerals Act, 2009; exploration within the meaning given in section 1 of the Petroleum (Exploration and “licence area” means– Production) Act, 2011; (a) with respect to mineral operations, the area “extractive industry agreement” means an agreement covered by the mineral right in question; and concluded with- (b) with respect to petroleum operations, has the (a) the holder of a mineral right that pertains to a meaning given in section 1 of the Petroleum licence granted under section 23 of the Mines (Exploration and Production) Act, 2011; and Minerals Act, 2009; or “mineral” has the meaning given in section 1 of the (b) the holder of a petroleum right that pertains Mines and Minerals Act, 2009; to a permit or licence granted under sections 23 (reconnaissance permit), 41 (petroleum “mineral operations” means exploration operations, licence) or 76 (pipeline permit) of the mining operations or reconnaissance operations Petroleum (Exploration and Production) Act, conducted with respect to a mineral right; 2011; “mineral right” has the meaning given in section 1 of “extractive industry producer” means a person the Mines and Minerals Act, 2009; engaged in `mining under a mining licence or production activities under a petroleum licence, but “mining area” has the meaning given in section 1 of excludes a person exempt from mineral resource rent the Mines and Minerals Act, 2009; tax; “mining licence” means an artisanal, small-scale or “financial cost” has the meaning given in sub section large-scale mining licence granted under the Mines (5) of section 35 of the Income Tax Act, 2000; and Minerals Act, 2009; 6 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 7 “mining operations” has the meaning given in section “production activities” with respect to petroleum 1 of the Mines and Minerals Act, 2009, but excludes operations has the meaning given in section 1 of the processing of minerals; Petroleum (Exploration and Production) Act, 2011, but excludes processing of petroleum; “National Revenue Authority ” means the National Revenue Authority established under the National “reconnaissance licence” has the meaning given in Revenue Authority Act, 2002 (Act No 11of 2002); section 1 of the Mines and Minerals Act, 2009; “overriding royalty” means a periodic payment made “reconnaissance operations”– by a person (other than a dividend) to the extent to which it is directly or indirectly calculated by (a) with respect to a mineral right, has the reference to the profitability, output or natural meaning given in section 1 of the Mines and resources extracted by the person or an associate of Minerals Act, 2009; and the person; (b) with respect to a petroleum right, means “petroleum” has the meaning given in section 1 of the “reconnaissance” within the meaning given Petroleum (Exploration and Production) Act, 2011; in section 1 of the Petroleum (Exploration and Production) Act, 2011; “petroleum operations” has the meaning given in section 1 of the Petroleum (Exploration and “relevant financial cost” and “relevant financial gain” Production) Act, 2011 and includes mean– “reconnaissance” as defined in that section, but excludes processing of petroleum; (a) a derivative or foreign exchange instrument; or “petroleum licence” has the meaning given in section 1 of the Petroleum (Exploration and Production) Act, (b) a financial cost or a financial gain, 2011; respectively, with respect to a debt claim or debt obligation denominated in a currency “petroleum right” has the meaning given in section 1 other than that in which the person accounts of the Petroleum (Exploration and Production) Act, for the purposes of this Act, but excluding 2011; the payment or receipt of standard interest; “precious stones” has the meaning given in paragraph “revenue” means revenue within the meaning given (b) of the definition of “precious mineral” in section in section 2 of the National Revenue Authority Act, 1 of the Mines and Minerals Act, 2009; 2002 that is imposed with respect to a revenue law; “processing” has the meaning prescribed by “revenue law” means a law referred to in the First regulations but excludes activities of a processing Schedule to the National Revenue Authority Act, nature that are ancillary to mineral operations or 2002 including a treaty affecting such a law; petroleum operations; 8 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 9 “separate mineral operation” has the meaning given (3) Subsection (2) applies notwithstanding any in section 5; consequences under the Mines and Minerals Act, 2009 and the Petroleum (Exploration and Production) Act, 2011 by reason of the “separate petroleum operation” has the meaning given person conducting unauthorised operations. in section 23; PART II–MINES AND MINERALS “service fee” has the meaning given in section 117 of the Income Tax Act, 2000;

3. (1) The holder of a mineral right shall pay royalties for Royalties “special stones” means a precious stone with a market minerals obtained pursuant to the right. value above 500,000 United States Dollars; (2) The royalties referred to in subsection (1) shall be “underlying ownership or control” has the meaning calculated by applying the relevant rates set out in paragraph 1 of the given in section 2 of the Income Tax Act, 2000; and First Schedule to the market value of the minerals obtained as determined under paragraph 2 of the First Schedule. “year of assessment” has the meaning given in section 2 of the Income Tax Act, 2000. (3) The holder of a mineral right shall pay royalties at the time prescribed in paragraph 3 of the First Schedule and in accordance (2) To the extent that a term used in this Act is not with the procedure outlined in Part V. 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 (4) Notwithstanding other provisions in this Act, the Act, 2000. Minister responsible for finance may, in consultation with the Ministry responsible for mines and mineral resources, prescribe by statutory (3) Subject to this Act, no law, whether enacted before or instrument special rules with respect to precious stones and special after the commencement of this Act, shall be interpreted so as to stones obtained under an artisanal mining licence for the purposes provide an exemption from royalties, income tax, mineral resource of- rent tax or petroleum resource rent tax as provided for in this Act. (a) determining the market value of the stones; and Unauthorised 2 (1) This Act shall apply to certain operations authorised Operations by mineral rights and petroleum rights issued under the Mines and (b) setting arrangements as to the time and Minerals Act, 2009 and the Petroleum (Exploration and Production) method of collection of royalties, including Act, 2011. collection from dealers and other third parties. (2) This Act shall extend to a person conducting 4. (1) A person conducting mineral operations shall be Income unauthorised operations that should be conducted under a mineral subject to income tax with respect to operations under the Income ta x right or petroleum right. Tax Act 2000 and this Act. 10 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 11 (2) The income tax for mineral operations for a year of (7) Transfer pricing in accordance with section 95 of the assessment shall be calculated by applying the rate set out in Income Tax Act, 2000 shall apply to subsection (6). paragraph 5 of the First Schedule to a person’s chargeable income from mineral operations for the year and if the person has other 5. (1) Subject to this section, mineral operations pertaining Separate chargeable income, that income shall be charged at the appropriate to each mineral right shall constitute a separate mineral operation. mineral rate under the Income Tax Act, 2000. (2) The following rules shall apply where a person who (3) For the purposes of calculating a person’s chargeable holds an exploration licence is subsequently granted a mining licence income from mineral operations- and the mining area falls wholly within the exploration licence area– (a) each separate mineral operation shall be (a) mineral operations conducted in respect of treated as an independent business and the the exploration licence to the date of grant person shall prepare accounts for that of the mining licence shall be treated as business separate from any other activity of conducted with respect to the mining licence the person; and and therefore the same separate mineral operation as conducted under that mining (b) the person shall calculate chargeable income, licence; loss and income tax liability for the business independently for each year of assessment. (b) from the date of grant of the mining licence, mineral operations conducted with respect (4) Section 95 of the Income Tax Act, 2000 shall apply– to the exploration licence shall be treated as a new separate mineral operation. (a) to arrangements between a separate mineral operation and other activities of the person (3) Where a person who holds an exploration licence– conducting the mineral operation (including other mineral operations or processing (a) is subsequently granted a mining licence and operations of the person); and the mining area falls wholly within the exploration licence area (whether or not prior (b) as though the arrangements were conducted mining licences have been granted with between associated persons. respect to the exploration licence area); and (5) Pursuant to subsection (4), the transfer of an asset to (b) subsequently (but before any further mining or from a separate mineral operation shall be treated as an acquisition licence is granted with respect to the and disposal of the asset. exploration area) relinquishes all of the exploration licence area (excluding the mining (6) Where two or more persons hold a mineral right, they area referred to in paragraph (a) or a mining shall calculate their chargeable income from mineral operations with area under an earlier mining licence), respect to the right separately, but do so as though they were associated persons. 12 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 13 the mineral operations conducted with respect to the relinquished (a) receipts derived or treated under section 95 exploration licence area referred to in paragraph (b) from the date the of the Income Tax Act 2000 as derived during mining licence referred to in paragraph (a) is granted, shall be treated the year from the disposal of minerals as conducted with respect to the mining licence and therefore the obtained from the licence area; same separate mineral operation as conducted under that mining licence. (b) compensation received, whether under a policy of insurance or otherwise, in respect (4) The following rules shall apply where a person who of loss or destruction of minerals from the holds a reconnaissance licence is subsequently granted an exploration licence area; licence- (c) amounts received in respect of the sale of (a) the mineral operations conducted with information pertaining to the mineral respect to the reconnaissance licence to the operations or mineral reserves; date of grant of the exploration licence shall be treated as conducted with respect to the (d) amounts required to be included under exploration licence and therefore the same section 10 in respect of a surplus in a separate mineral operation as conducted rehabilitation fund; under that exploration licence; (e) amounts required to be included under (b) from the date of grant of the exploration paragraph 6 of the First Schedule, including licence, mineral operations conducted with with respect to the disposal of an interest in respect to the reconnaissance licence shall a mineral right; and be treated as a new separate mineral operation. (f) any other amounts derived by that person during the year from or incidental to the (5) The rule in paragraph (a) of subsection (4) applies for operation that are included in calculating the purposes of applying subsection (2). income under the Income Tax Act, 2000. (6) The Minister responsible for finance, in consultation 7. (1) Subject to this section , in calculating a person’s Deductions with the Minister responsible for mines and mineral resources, may chargeable income from a separate mineral operation for any year of for mineral opera tions by statutory instrument make further provision for the determination assessment the following shall be deducted- of separate mineral operations including with respect to adjacent mineral rights and merging of mineral rights. (a) royalties, annual charges and rent paid by that person under this Act or the Mines and Income from 6. In calculating a person’s income from a separate mineral Minerals Act, 2009 with respect to a mineral mineral operation for a year of assessment the following shall be included- right, but not exceeding any liability under opera tions the relevant extractive industry agreement; 14 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 15 (b) expenditure (other than financial costs) (2) No deduction shall be allowed in calculating incurred in respect of the mineral operation chargeable income from a separate mineral operation– on the following, but only if it has been expensed in the person’s financial accounts (a) under paragraphs (b), (e) and (f) of and that expensing is in accordance with subsection (1) of section 32 or sections 37, generally accepted accounting principles- 40, 43 or 44 of the Income Tax Act, 2000; (i) expenditure on reconnaissance and (b) for any amount unless it is incurred in– exploration operations; and (i) the acquisition or improvement of a (ii) expenditure on waste removal, valuable asset used in the operation; or overburden stripping, shaft sinking and like activities as may be prescribed by (ii) securing services or facilities for the regulations; operation and the amount constitutes income of the recipient that has a source (c) capital allowances granted with respect to in Sierra Leone in accordance with the mineral operation and calculated in section 89 of the Income Tax Act, 2000; accordance with paragraph 6 of the First Schedule including with respect to the (c) for an allowable loss under sections 32 and disposal of an interest in a mineral right; 32A of the Income Tax Act, 2000, except for an allowable loss in conducting the operation (d) contributions to and other expenses incurred as provided for in section 8; in respect of a rehabilitation fund for the mineral operation as required under the (d) to the extent the amount does not comply extractive industry agreement or with section 95 of the Income Tax Act, 2000; rehabilitation plan approved by the Minister responsible for mines and mineral resources; (e) for bonus payments; or (e) expenses incurred by that person in the (f) for excluded expenditure or overriding course of reclamation, rehabilitation and royalties. closure of a mineral operation, but only to the extent funds in the relevant rehabilitation (3) In calculating a person’s chargeable income from a fund are not yet available or are inadequate; separate mineral operation for a year of assessment, relevant financial and costs incurred during the year may be deducted only to the extent that relevant financial gains are included in calculating the income. (f) any other amounts incurred by that person during the year directly in the course of the (4) The limitation referred to in subsection (3) shall be in mineral operation that may be deducted addition to that provided in section 35 of the Income Tax Act, 2000. under the Income Tax Act, 2000. 16 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 17 (5) Any excess financial cost for which a deduction is 8. Paragraph (c) of subsection (1) of section 32 and section Losses fr om not available under subsection (3) shall be carried forward and treated 32A of the Income Tax Act ,2000 shall apply to allowable losses of a mineral as a financial cost incurred in the following year of assessment and person from a separate mineral operation with the following operations. paragraphs (b) and (c) of section 8 of this Act and section 88 of the modifications- Income Tax Act, 2000 shall apply to restrict the carry forward of that excess. (a) tax payable may be reduced to 15 percent of the tax that would be due if losses were not (6) Expenditure referred to in subparagraphs (i) and (ii) of carried forward; paragraph (b) of subsection (1) that– (a) is not expensed in the person’s financial (b) a loss may not be carried forward after the accounts in accordance with generally latter of the following– accepted accounting principles; and (i) the tenth year of assessment from the (b) does not otherwise fall to be included in the year of assessment in which the loss adjusted cost base of an asset, is not was incurred; and deductible and shall be treated as the cost of a depreciable asset for which capital (ii) the tenth year of assessment from the allowances are granted with respect to a year of assessment in which commercial separate mineral operation in accordance mining production commenced; with paragraph 6 of the First Schedule. (c) losses shall be used in the order in which (7) The Minister responsible for finance, in consultation they are incurred; and with the Minister responsible for mines and mineral resources, may by statutory instrument- (d) losses from a separate mineral operation may be deducted only in calculating future (a) make further provision for the deduction of chargeable income from that operation and amounts in calculating income from mineral not chargeable income from any other mineral operations; and operations or non-mineral operations or activities. (b) where goods or services are supplied to a mineral right holder by an associated person, 9. (1) Where a company that holds a mineral right suffers a Indirect limit the deduction for any amount incurred 25 percent or more change in its underlying ownership or control the disposal by the right holder to the no profit amount of mineral company shall be treated as disposing of a proportionate interest in rights referred to in subsection (8). its mineral right and immediately reacquiring that interest. (8) The no profit amount shall be the actual costs incurred (2) Where subsection (1) applies, the company shall be by the associated person in the provision of the goods or services, treated as– but shall exclude any cost incurred in favour of another associated person. 18 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 19 (a) receiving for the disposal, consideration (b) breaches an approved rehabilitation plan, equal to the market value of the proportion of the right treated as disposed of; and the surplus shall be included in calculating the chargeable income of the person from the separate mineral operation for the year of (b) incurring in respect of the reacquisition an assessment in which the event referred to in paragraph (a) or (b) equal amount. occurs. (3) A company that suffers a change of ownership or (3) In addition to the consequences referred to in control referred to in subsection (1) shall notify the Commissioner- subsection (2), the person may be liable for mineral resource rent tax General when it files its next tax return under section 97 of the Income with respect to the surplus. Tax Act, 2000. (4) A company that fails to comply with subsection (3) is 11. (1) Part V of the Income Tax Act,2000 shall not apply to Minimum liable for a penalty equal to 30 percent of the market value of the mineral operations conducted under a large –scale mining licence. tax and small micro tax- interest in the mineral right treated as disposed of under subsection payers. (1). (2) Where a person conducting mineral operation qualifies for treatment under subsection (2) of section 4 and Part V (5) This section shall be without prejudice to direct of the First Schedule of the Income Tax Act, 2000, the provisions disposals of mineral rights and the application of section 88 of the shall apply for the purposes of determining the person’s income tax Income Tax Act, 2000 to a company that holds a mineral right. liability with respect to the mineral operations notwithstanding section 4 of this Act. Rehabili- 10. (1) The holder of a rehabilitation fund shall be exempted tation funds. 12. (1) A holder of a mining licence that has accumulated net Mineral from tax for the following- receipts for a year of assessment from a separate mineral operation Resource rent tax imposed. (a) the receipt of contributions to the fund that shall pay mineral resource rent tax. are deductible for a mineral right holder under paragraph (d) of subsection (1) of section 7; (2) The amount of mineral resource rent tax referred to in and subsection (1), shall be calculated by applying the rate specified in paragraph 7 of the First Schedule to the accumulated net receipts for (b) amounts (including interest) accumulated in the year. or withdrawn from the fund. (3) Subject to section 17, for the purposes of calculating (2) Where there is a surplus in a rehabilitation fund and mineral resource rent tax, subsection (2) of section 5 shall not apply. the person conducting the relevant separate mineral operation– (4) Mineral resource rent tax shall be imposed in addition (a) completes rehabilitation in accordance with to any other tax or charge, including income tax. the approved rehabilitation plan so as to be entitled to receive the surplus; or 20 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 21 (5) Mineral operations conducted under an artisanal or (a) gross amounts directly included in small-scale mining licence shall be exempt from mineral resource rent calculating income from the mineral operation tax unless- for the year as stipulated under section 6, (a) specifically prescribed by regulations made including service fees and amounts received under this Act; or from the disposal of minerals and other trading stock; (b) section 96 of the Income Tax Act, 2000 applies. (b) gross positive amounts that enter into the calculation of a net amount that is included Accumulated 13. Accumulated net receipts of a separate mineral operation net receipts in calculating income from the mineral for a year of assessment shall be to the extent to which net- and accumu- operation for the year as stipulated under lated net ex- section 6, including consideration received penditure ( a) receipts of the operation for the year exceed on the disposal of depreciable, business or accumulated net expenditure for that other assets; operation for the previous year of assessment (if any) as increased by the uplift specified (c) gross positive amounts that enter into the in paragraph 8 of the First Schedule. calculation of a net amount (such as a loss) that is deductible in calculating chargeable (b) expenditure for the operation for the year (if income for the year where the amount is any) plus accumulated net expenditure for referred to in section 7, including amounts of that operation for the previous year of the type referred to in paragraph (b); and assessment (if any) as increased by the uplift specified in paragraph 8 of the First Schedule, (d) with respect to a surplus in a rehabilitation exceed net receipts of the operation for the fund, any amount provided for in section 19. year (if any). (2) Gross receipts of a separate mineral operation shall Net receipts 14. (1) Net receipts of a separate mineral operation for a year and net not include– of assessment shall be to the extent to which gross receipts of the expenditure operation for the year exceed deductible expenditure of the operation (a) interest and other financial gains, including for that year. and treated as interest income under the Income Tax Act, 2000; or (2) Net expenditure of a separate mineral operation for a year of assessment shall be the extent to which deductible expenditure (b) subject to section 18, consideration received of the operation for the year exceeds gross receipts of the operation for the transfer of a mineral right. for that year. (3) An amount referred to in subsection (1)– Gross 15. (1) Subject to this section, gross receipts of a separate Receipts mineral operation for a year of assessment shall be the sum of the (a) shall be determined in accordance with following gross amounts without deduction– section 95 of the Income Tax Act, 2000; and 22 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 23 (b) may be included in the gross receipts of a (a) interest or other financial costs, including an year of assessment irrespective of whether amount treated as interest under the Income or not it is actually received during that year. Tax Act, 2000; Deductible 16. (1) Subject to this section, the deductible expenditure of (b) amounts claimed as capital allowances, but Expenditure a separate mineral operation for a year of assessment shall be the not to limit a deduction under paragraph (b) sum of the following gross amounts– of subsection (1); (a) gross amounts in respect of the mineral (c) losses referred to in section 8 of this Act and operation that are directly deducted in paragraph (c) of subsection (1) of section calculating chargeable income for the year 32 and section 32A of the Income Tax Act, and where the amounts are referred to in 2000; section 7; (d) subject to section 18, amounts included in (b) gross expenditure included during the year the adjusted cost base of a mineral right in the adjusted cost base of a depreciable or including bonus payments; and business asset used in the mineral operation; (e) payments to acquire an interest in the profits, (c) other gross expenditure that enters into the receipts or expenditures of the mineral calculation of a net amount that is included operation and payments made with respect in calculating income from the mineral to such interests. operation for the year; (3) Expenditure shall not be deductible expenditure to (d) other gross expenditure that enters into the the extent that it exceeds the requirements of section 95 of the calculation of a net amount (such as a loss) Income Tax Act, 2000. that is deductible in calculating chargeable income from the mineral operation for the year where that amount is referred to in section 7; 17. (1) With respect to the year of assessment in which a Year of Commen- person commences mining operations under a mining licence and for Cement (e) the amount of income tax payable with respect the purposes of allowing a deduction for exploration expenditure to the mineral operation for the year as incurred during the seven years prior to the commencement, the calculated under section 4; and deduction allowed under paragraph (f) of subsection (1) of section 16 shall be equal to the amount by which relevant deductible (f) with respect to the year of commencement of expenditure exceeds relevant gross receipts. mining operations, any amount provided for in section 17. (2) No amount shall be deductible under paragraph (f) of subsection (1) of section 16 unless the relevant deductible expenditure (2) The deductible expenditure of a separate mineral and relevant gross receipts have been audited and certified as correct operation shall not include– by the Commissioner-General. 24 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 25 (3) The Minister responsible for finance may by statutory 18. (1) Where a person transfers an interest in a mineral right Transfer instrument make regulations prescribing the time limit within which during a year of assessment together with the person’s interest the of mineral rights the Commissioner-General should conduct the audit and certification. separate mineral operation conducted under that right, for the purposes of calculating any mineral resource rent tax payable by the (4) In this section– transferee, the transferee shall be treated as– (a) having the same accumulated net expenditure (a) “relevant deductible expenditure” means for the mineral operation for the year of expenditure– assessment preceding the transfer as the transferor had ; (i) incurred by the person exclusively on exploration in the relevant licence area (b) incurring the same deductible expenditure for and no more than seven years before the mineral operation during the year of the date of commencement referred to assessment of the transfer and to the time of in subsection (1); transfer as the transferor did; (ii) of a type referred to in section 16 (except (c) deriving the same gross receipts for the paragraph (f) of subsection (1) of mineral operation during the year of section 15), presuming that the mining assessment of the transfer and to the time of operation in question is that conducted transfer as the transferor did; and under the exploration licence; (d) having paid the same amount of instalments (b) “relevant gross receipts” means receipts- under section 45 during the year of assessment of the transfer and to the time of (i) derived by a person from exploration in transfer as the transferor did. a licence area and not more than seven (2) Where a person transfers only a part of an interest in years before the date of commencement a mineral right, the amounts referred to in subsection (1) shall be referred to in subsection (1); apportioned according to the amount of the interest transferred. (ii) of a type referred to in section 15, (3) Where expenditure, receipts or payments are presuming that the mining operation in attributed to a transferee under this section, those expenditure, receipts question is that conducted under the or payments shall no longer be attributed to the transferor. exploration licence; and 19 (1) In the circumstances provided for in section 10, the Rehabili- (c) “relevant licence area” means that part of a surplus in a rehabilitation fund shall be included in calculating the tation fund positive licence area under an exploration licence that chargeable income of a person from a separate mineral operation. balance was surrendered in favour of the grant of the mining licence with respect to which mining (2) The inclusion referred to in subsection (1) shall also operations referred to in subsection (1) are be included in gross receipts for the purposes of calculating mineral conducted. resource rent tax. 26 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 27 Processing 20. (1) A mineral right holder conducting processing of 22. (1) A person conducting petroleum operations shall be Income minerals shall be subject to income tax for those activities subject to income tax for the operation as prescribed under the Ta x Income Tax Act 2000 (2) Paragraph (d) of section 6, paragraphs (d) and (e) of subsection (1) of section 7 and section 10 shall applyin calculating a (2) The income tax for petroleum operations for a year of mineral right holder’s income from a business that includes processing assessment shall be calculated by applying the rate set out in of minerals, but only to the extent the expenses and fund relate to paragraph 4 of the Second Schedule to a person’s chargeable income that processing. from petroleum operations for the year and if the person has other chargeable income, that income shall be charged at the appropriate (3) Paragraph (c) of subsection (1) of section 32 and rate under the Income Tax Act, 2000. section 32A of the Income Tax Act, 2000 shall apply to allowable losses of a person from conducting a business that includes (3) For the purposes of calculating a person’s chargeable processing of minerals so that tax payable may be reduced to 15 income from petroleum operations– percent of the tax that would be due if losses were not carried forward. (a) each separate petroleum operation shall be treated as an independent business and the PART III–PETROLEUM person shall prepare accounts for that Royalties 21. (1) The holder of a petroleum right shall pay royalties for business separate from any other activity of Imposed petroleum obtained pursuant to the right. the person; and (2) The royalties referred to in subsection (1) shall be (b) the person shall calculate chargeable income, calculated by applying the relevant rates set out in paragraph 1 of the loss and income tax liability for the business Second Schedule to the market value of the petroleum obtained as independently for each year of assessment. determined under paragraph 2 of the Second Schedule. (4) Section 95 of the Income Tax Act, 2000 shall apply– (3) The holder of a petroleum right shall pay royalties at the time prescribed in paragraph 3 of the Second Schedule and in (a) to arrangements between a separate accordance with the procedure outlined in Part V. petroleum operation and other activities of the person conducting the petroleum (4) Petroleum that is returned to a natural reservoir shall operation (including other petroleum not be treated as obtained until it is retrieved from the reservoir, with operations or refining or other processing the approval of the Minister responsible for management of petroleum operations of the person); and matters,. (b) as though the arrangements were conducted (5) Royalties may be paid in kind in accordance with between associated persons. section 107 of the Petroleum (Exploration and Production) Act, 2011, provided that no more than fifteen percent of royalties payable under (5) Pursuant to subsection (4), the transfer of an asset to a petroleum right for a year of assessment may be paid in kind unless or from a separate petroleum operation shall be treated as an the Minister responsible for finance agrees. acquisition and disposal of the asset. 28 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 29 (6) Where two or more persons hold a petroleum right, (b) subsequently (but before any further they shall calculate their chargeable income from petroleum operations approval of a development and operation with respect to that right separately, but shall do so as though they plan within the petroleum licence area) the were associated persons. holder of the petroleum licence relinquishes all of the licence area that is not subject to an (7) Transfer pricing in accordance with section 95 of the approved development and operation plan Income Tax Act, 2000 shall apply to subsection (6). (whether the approval referred to in paragraph (a) or an earlier approval), Separate 23. (1) Subject to this section, petroleum operations the petroleum operations conducted in the relinquished area referred petroleum pertaining to each petroleum right shall constitute a separate petroleum opera tions to in paragraph (b) from the date of approval shall be treated as operation. conducted with respect to the area of the development and operation plan referred to in paragraph (a) and therefore the same separate (2) The following rules shall apply after approval of a petroleum operation as conducted in that area. development and operation plan within a petroleum licence area– (4) The Minister responsible for finance, in consultation (a) petroleum operations conducted pursuant to with the Minister responsible for the management of petroleum matters, the petroleum right to the date of approval may by statutory instrument and for the purposes of this Act – and petroleum operations conducted with respect to the development and operation area (a) prescribe circumstances in which and the after that date shall be treated as conducted extent to which petroleum operations with respect to the same separate petroleum conducted pursuant to a pipeline permit shall operation; and be treated as conducted with respect to the same separate petroleum operation as that (b) from the date of approval, petroleum conducted with respect to a development and operations conducted pursuant to the operation area serviced by the pipeline; and petroleum right that are not in respect of the development and operation area shall be (b) apportion pipeline costs between petroleum treated as a new separate petroleum operations conducted in more than one operation. development and operation area. (3) Where– (5) In this section, “pipeline permit” means a permit granted under section 76 of the Petroleum (Exploration and Production) (a) there is approval of a development and Act, 2011. operation plan within a petroleum licence area (whether or not there are prior plans approved (6) The Minister responsible for finance, in consultation within the licence area); and with the Minister responsible for the management of petroleum matters, may by statutory instrument make further provision for the determination of separate petroleum operations including adjacent petroleum rights and merging of petroleum rights. 30 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 31 Income 24. (1) Subject to subsections (1) and (3), in calculating a 25. Subject to this section , in calculating a person’s chargeable Deductions From petroleum person’s income from a separate petroleum operation for a year of income from a separate petroleum operation for a year of assessment forPetroleum Operations operations. assessment the following shall be included - the following shall be included- (a) royalties, area fees and rent paid by the person (a) the greater of the market value and the actual under this Act or the Petroleum (Exploration sale price of petroleum obtained from the and Production) Act, 2011 for the petroleum licence area that is disposed of or treated as right, but not exceeding any liability under disposed of during the year; the relevant extractive industry agreement; (b) compensation received, whether under a policy of insurance or otherwise, in respect (b) expenditure (other than financial costs) for of loss or destruction of petroleum from the the petroleum operation on the following, but licence area; only if it has been expensed in the person’s financial accounts and that expensing is in (c) amounts received for the sale of information accordance with generally accepted pertaining to the operations or petroleum accounting principles: reserves; (i) expenditure on reconnaissance, (d) amounts required to be included under appraisal and exploration operations; section 28 for a surplus in a decommissioning and fund; (ii) expenditure in developing petroleum (e) amounts required to be included under operations and infrastructure, including paragraph 5 of the Second Schedule as may be prescribed by regulations; including the disposal of an interest in a petroleum right; and (c) capital allowances granted for petroleum (f) any other amounts derived by the person operation and calculated in accordance with during the year from or incidental to the paragraph 5 of the Second Schedule operation that are included in calculating including the disposal of an interest in a income under the Income Tax Act, 2000. petroleum right; (2) The market value of petroleum shall be determined in (d) contributions to and other expenses incurred accordance with paragraph 2 of the Second Schedule. in respect of a decommissioning fund for the petroleum operation as required under the (3) Petroleum obtained from a separate petroleum extractive industry agreement or de- operation that is used to pay royalties in kind as referred to in commissioning plan approved by the subsection (4) of section 21 shall not be included in calculating the Minister responsible for management of income of the separate petroleum operation. petroleum matters; 32 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 33 (e) expenses incurred by the person in the course 27. (1) Where a company that holds a petroleum right suffers Indirect of reclamation, rehabilitation and closure of 25 percent or more change in its underlying ownership or control, disposal of petroleum the petroleum operation, but only to the the company shall be treated as disposing of a proportionate interest rights. extent that funds in the relevant in its petroleum right and immediately reacquiring that interest. decommissioning fund are not yet available or are inadequate; and (2) Where subsection (1) applies, the company shall be treated as– (f) any other amounts incurred by the person (a) receiving for the disposal, consideration during the year directly in the course of the equal to the market value of the proportion operation that may be deducted under the of the right treated as disposed of; and Income Tax Act, 2000. Losses from 26. Paragraph (c) of subsection (1)of section 32 and section (b) incurring in respect of the reacquisition an Petroleum 32A of the Income Tax Act 2000 shall apply to allowable losses of a equal amount. Operations. person from a separate petroleum operation with the following modifications– (3) A company that suffers a change of ownership or control referred to in subsection (1) shall notify the Commissioner- (a) tax payable may be reduced to 15 percent of General when it files its next tax return under section 97 of the Income the tax that would be due if losses were not Tax Act, 2000. carried forward; (4) A company that fails to comply with subsection (b) a loss may not be carried forward after the (3)shall be liable for a penalty equal to 30 percent of the market value latter of the following- of the interest in the petroleum right treated as disposed of under (i) the tenth year of assessment from the subsection (1). year of assessment in which the loss was incurred; and (5) This section shall be without prejudice to direct disposals of petroleum rights and the application of section 88 of the (ii) the tenth year of assessment from the Income Tax Act, 2000 to a company that holds a petroleum right. year of assessment in which commercial petroleum production commenced; 28. (1) The holder of a decommissioning fund shall be Decommiss- ioning funds. exempted from tax for the following - (c) losses shall be used in the order in which they are incurred; and (a) the receipt of contributions to the fund that (d) losses from a separate petroleum operation are deductible for a petroleum right holder may be deducted only in calculating future under paragraph (d) of subsection (1) of chargeable income from that operation and section 25; and not chargeable income from any other petroleum operation or non-petroleum activities. 34 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 35 (b) amounts (including interest) accumulated in (4) Petroleum resource rent tax shall be imposed in or withdrawn from the fund. addition to any other tax or charge, including income tax. (2) Where there is a surplus in a decommissioning fund

31. (1) Accumulated net receipts of a separate petroleum Accumulated and the person conducting the relevant separate petroleum operation- net receipts operation for a year of assessment shall be to the extent to which net and accumu- (a) completes decommissioning in accordance receipts of the operation for the year exceed accumulated net lated net with the approved decommissioning plan so expenditure for that operation for the previous year of assessment expenditure. as to be entitled to receive the surplus; or as increased by the uplift specified in paragraph 7 of the Second Schedule. (b) breaches the terms of the approved decommissioning plan, (2) Accumulated net expenditure for a separate petroleum the surplus shall be included in calculating the chargeable income of operation for a year of assessment shall be the extent to which net the person from the separate petroleum operation for the year of expenditure for the operation for the year plus accumulated net assessment in which the event referred to in paragraph (a) or (b) expenditure for that operation for the previous year of assessment (if occurs. any) as increased by the uplift specified in paragraph 7 of the Second Schedule exceed net receipts of the operation for the year . (3) In addition to the consequences referred to in subsection (2), the person may be liable for petroleum resource rent 32. (1) Net receipts of a separate petroleum operation for a Net receipts tax for the surplus. and net year of assessment shall be the extent to which gross receipts of the expenditure. operation of the year exceed deductible expenditure of the operation Minimum 29. Part V of the Income Tax Act shall not apply to petroleum tax. for the year. operations . PETROLEUM RESOURCE RENT TAX (2) Net expenditure of a separate petroleum operation for a year of assessment shall be the extent to which deductible Petroleum 30. (1) A holder of a petroleum licence that has accumulated expenditure of the operation for the year exceeds gross receipts of resource rent the operation for the year. tax. net receipts or a year of assessment from production activities of a separate petroleum operation shall pay petroleum resource rent tax, imposed. 33. (1) Subject to this section , gross receipts of a separate Gross Receipts. (2) The amount of petroleum resource rent tax referred to petroleum operation for a year of assessment shall be the sum of the in subsection (1) shall be calculated by applying the rate specified in following gross amounts without deduction– paragraph 6 of the Second Schedule to the accumulated net receipts for the year. (a) gross amounts directly included in calculating income from the petroleum (3) Subject to section 34, for the purposes of calculating operation for the year as stipulated under petroleum resource rent tax production activities conducted with section 24, including service fees and respect to the area covered by an approved development and amounts received from the disposal of operation area shall be treated as a petroleum operation separate petroleum and other trading stock; from any other petroleum operation. 36 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 37 (b) gross positive amounts that enter into the Deductible

34. (1) Subject to this section , the deductible expenditure Expenditure calculation of a net amount that is included of a separate petroleum operation for a year of assessment shall be in calculating income from the petroleum the sum of the following gross amounts- operation for the year as stipulated under section 24, including consideration received (a) gross amounts for the petroleum operation on the disposal of depreciable, business or that are directly deducted in calculating other assets; chargeable income for the year and where the amounts are referred to in section 25; (c) gross positive amounts that enter into the calculation of a net amount (such as a loss) (b) gross expenditure included during the year that is deductible in calculating chargeable in the adjusted cost base of a depreciable or income for the year where the amount is business asset used in the petroleum referred to in section 25, including amounts operation; of the type referred to in paragraph (b); and (c) other gross expenditure that enters into the (d) for a surplus in a decommissioning fund, any calculation of a net amount that is included amount provided for in section 37. in calculating income from the petroleum operation for the year; (2) Gross receipts of a separate petroleum operation shall not include– (d) other gross expenditure that enters into the calculation of a net amount (such as a loss) (a) interest and other financial gains, including that is deductible in calculating chargeable an amount treated as interest income under income from the petroleum operation for the the Income Tax Act, 2000; or year where that amount is referred to in section 25; (b) subject to section 36, consideration received for the transfer of a petroleum right. (e) the amount of income tax payable for the petroleum operation for the year as (3) An amount referred to in subsection (1)– calculated under section 22; and (a) shall be determined in accordance with (f) for the year of commencement of production section 95 of the Income Tax Act, 2000; and activities, any amount provided for in section 35. (b) may be included in the gross receipts of a year of assessment irrespective of whether (2) The deductible expenditure of a separate petroleum or not it is actually received during that year. operation shall not include– 38 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 39 (a) interest or other financial costs, including an (3) The Minister responsible for finance may by amount treated interest under the Income statutory instrument make regulations prescribing the time limit within Tax Act, 2000; which the Commissioner-General shall conduct the audit and certification. (b) amounts claimed as capital allowances, but not to limit a deduction under paragraph (b) (4) In this section- of subsection (1); (a) “relevant deductible expenditure” means (c) losses referred to in section 26 and paragraph expenditure- (c) of subsection (1) of section 32 and section 32A of the Income Tax Act, 2000; (i) incurred by a person exclusively on exploration in the relevant licence area (d) subject to section 36, amounts included in and no more than seven years before the adjusted cost base of a petroleum right the date of commencement referred to including bonus payments; and in subsection (1); and (e) payments to acquire an interest in the profits, (ii) of a type referred to in section 34 (other receipts or expenditures of the petroleum than paragraph (f) of subsection (1) of operation and payments made for such section 34) presuming that the interests. petroleum operation in question is that conducted under the petroleum licence (3) Expenditure shall not be deductible expenditure to the prior to the commencement; extent that it exceeds the requirements of section 95 of the Income Tax Act, 2000. (b) “relevant gross receipts” means receipts– Year of 35. (1) In a year of assessment in which a person commences (i) derived by the person from exploration Commen- Cement production activities under a petroleum licence and for the purposes in the relevant licence area and no more of allowing a deduction for exploration expenditure incurred during than seven years before the date of the seven years prior to the commencement, the deduction allowed commencement referred to in under paragraph (f) of subsection (1) of section 34 shall be equal to subsection (1); and the amount by which relevant deductible expenditure exceeds relevant gross receipts. (ii) of a type referred to in section 33, presuming that the petroleum operation (2) No amount shall be deductible under paragraph (f) of in question is that conducted under the subsection (1) of section 34 unless the relevant deductible expenditure petroleum licence prior to the and relevant gross receipts have been audited and certified as correct commencement; and by the Commissioner-General. 40 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 41 (c) “relevant licence area” means that part of a (3) Where expenditure, receipts or payments are petroleum licence area that becomes the attributed to a transferee under this section, such expenditure, receipts development and operation area in which the or payments shall not be attributed to the transferor. production activities referred to in subsection (1) are conducted. 37. (1) In the circumstances as provided for in section 27, Decommissi- oning fund the surplus in a decommissioning fund shall be included in calculating positive Transfer of 36. (1) Where a person transfers an interest in a petroleum the chargeable income of a person from a separate petroleum balance Petroleum Rights right during a year of assessment together with the person’s interest operation. in the separate petroleum operation conducted under that right, for the purposes of calculating any petroleum resource rent tax payable (2) The inclusion referred to in subsection (1) shall also by the transferee, the transferee shall be treated as– be included in gross receipts for the purposes of calculating petroleum resource rent tax. (a) having the same accumulated net expenditure for the petroleum operation for the year of 38. (1) A petroleum right holder conducting processing of Processing assessment preceding the transfer as the petroleum shall be subject to income tax for those activities. transferor had (if any); (2) Decommissioning and decommissioning funds as set (b) incurring the same deductible expenditure for out in paragraph (d) of subsection (1) of section 24, paragraphs (d) the petroleum operation during the year of and (e) of subsection (1) of section 25 and section 28 shall apply, with assessment of the transfer and to the time of necessary adaptations, in calculating a petroleum right holder’s transfer as the transferor did (if any); income from a business that includes processing of petroleum, but only to the extent the expenses and funds relate to that processing. (c) deriving the same gross receipts for the petroleum operation during the year of (3) Paragraph (c) of subsection (1) of section 32 and assessment of the transfer and to the time of section 32A of the Income Tax Act, 2000 shall apply to allowable transfer as the transferor did (if any), and losses of a person from conducting a business that includes processing of petroleum so that tax payable may be reduced to 15 (d) having paid the same amount of instalments percent of the tax that would be due if losses were not carried forward. under section 45 during the year of assessment of the transfer and to the time of PART IV–EXTRACTIVE INDUSTRYAGREEMENTS transfer as the transferor did (if any).

39. (1) In applying and administering a law relating to revenue Obligation (2) Where a person transfers only a part of an interest in the Commissioner-General shall not take into account any extractive to take account of a petroleum right, the amounts referred to in subsection (1) shall be industry agreement unless the Minister responsible for Finance has– extractive apportioned according to the amount of the interest transferred. industry agreements 42 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 43 (a) certified a true and correct copy of that (c) the alteration to the material detriment of agreement; and the right holder of- (i) royalty, income tax, resource rent tax (b) made that copy available to the and withholding tax rates and the rate Commissioner-General (whether through a of charges due on the importation of public register or otherwise). goods or services; or (2) Subject to subsection (1) and section 41, in the case (ii) the structural features and of an extractive industry agreement concluded before the methodology for calculating the base commencement of this Act, the Commissioner-General shall apply upon which the charges referred to in and administer a revenue law to a party to the agreement after taking sub-paragraph (i) are imposed, into account any modification or protection of the revenue law including rules and rates as to capital required by the agreement. allowances, other cost recovery and carry forward of losses. (3) Subject to subsection (1) and section 41, in the case (2) To the extent a fiscal stability clause in an extractive of an extractive industry agreement concluded on or after the industry agreement incorporates protection of the type referred to commencement of this Act, the Commissioner-General shall apply in paragraph (c) of subsection (1), then unless the clause is extended and administer a revenue law to a party to the agreement after taking by further agreement the clause ceases to be an approved fiscal into account any approved fiscal stability clause contained in the stability clause- agreement. (a) in the case of a mining agreement, ten years (4) Except as provided for in subsections (2) and (3), the after the conclusion of the agreement; and Commissioner-General shall apply and administer any law relating to revenue without taking account of extractive industry agreements. (b) in the case of a petroleum agreement, thirteen years after the first approval of a Approved development and operation plan within the

40. (1) Subject to subsection (2), a fiscal stability clause in licence area. Fiscal Stabil- ity Clause. an extractive industry concluded on or after the commencement of this Act shall be an approved fiscal stability clause to the extent that (3) In this section, “fiscal stability clause” means a clause it protects a mineral or petroleum right holder from– in an extractive industry agreement that warrants that the fiscal regime applying to a contracting party shall continue to apply or (a) the imposition of new discriminatory taxes or not be altered to the detriment of the party. Government charges that does not exist at the date the agreement is concluded; 41. (1) The purpose of this section is to prevent a party to No double be- nefits un-der (b) the alteration of an existing tax or Government an extractive industry agreement from securing both a modified or Extractive charge in a discriminatory manner; or protected treatment under the agreement for laws relating to revenue Industry while at the same time claiming the benefits of amendments to the agreements revenue law that occurs after conclusion of the agreement. 44 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 45 (2) Where an extractive industry agreement modifies or (a) means the revenue law as applicable at the protects an old revenue law under section 39, any old revenue law time it is modified or protected by an extractive that is modified or protected by the agreement shall continue to industry agreement (see subsection (2)); and apply until the earlier of- PART V–ADMINISTRATION (a) the end of the agreement or relevant clauses in the agreement; 42. (1) The holder of a mineral or petroleum right may elect to Accounts maintain accounts, be assessed and pay revenue in United States (b) in the case of an agreement concluded before Dollars or other currency as may be prescribed. the commencement of this Act, the first alteration of the modified or protected (2) The election under subsection (1) shall– treatment in the agreement after the commencement of this Act; and (a) be collective and for all three purposes referred to in subsection (1); (c) the relinquishment by the person of the person’s right to modified and protected (b) be in writing and filed with the National treatment. Revenue Authority at the time of application for the relevant licence; and (3) In calculating the revenue liability of the person during the application period referred to in subsection (2) the (c) apply for the duration of the licence. Commissioner-General may, in his discretion-

43. (1) A person who is liable to pay royalties under sub- Assessment (a) continue to apply other provisions of the section 3 of section 21 shall file with the Commissioner-General a of royalties. old revenue law referred to in subsection (2) return of royalties and make payment at the time the royalties should (whether or not the law have been repealed be paid. or amended) that the Commissioner-General considers are associated with or that have (2) A return filed under subsection (1) shall be in the an application that is consequential upon the manner and form prescribed specifying– provisions mentioned in subsection (2); and (a) the volume of minerals or petroleum liable for (b) disapply any old revenue law that the royalties; Commissioner-General considers to - (b) the market value of the minerals or petroleum (i) correspond to provisions referred to in calculated in accordance with paragraph 2 of paragraph (a); or the First Schedule or paragraph 2 of the (ii) have no corresponding provision in the Second Schedule, as the case requires; revenue law. (4) In this section, “old revenue law”- 46 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 47 (c) the amount of royalties the person should (a) gross receipts, deductible expenditure, net pay; and receipts, net expenditure, accumulated net receipts and accumulated net expenditure for (d) any other information the Commissioner- the year of assessment from the separate General may prescribe. mineral or petroleum operation, as the case requires; (3) Subject to this section, Part XIII of the Income Tax Act, 2000 shall apply, with any necessary adaptations, to a return (b) accumulated net expenditure for that filed under subsection (1). operation for the previous year of assessment as increased by any uplift available; (4) A return filed under subsection (1) shall be treated as a self-assessment but– (c) where the producer estimates accumulated net receipts for the year of assessment, the (a) an assessment under section 102 of the amount of mineral resource rent tax or Income Tax Act, 2000 may be levied with petroleum resource rent tax payable with respect to royalties; and respect to those receipts; and (b) a self-assessment under this section or an (d) any other information the Commissioner- assessment under section 102 of the Income General may prescribe. Tax Act, 2000 may be amended under section 103 of the Income Tax Act, 2000. (3) An extractive industry producer shall file an estimate under subsection (1), irrespective of whether any amount of mineral resource Assessment 44. The Income Tax Act, 2000 shall apply to the assessment rent tax or petroleum resource rent tax is estimated as payable. of income and payment of income tax for mineral and petroleum operations . tax. (4) An extractive industry producer that estimates mineral resource rent tax or petroleum resource rent tax as payable for a year Instalments of 45. (1) At the time an extractive industry producer is liable to of assessment under subsection (3) shall pay that mineral resource mineral and petroleum file an estimate of chargeable income under section 113 of the Income rent tax or petroleum resource rent tax by quarterly instalment at the resource rent Tax Act 2000, the producer shall also file an estimate of the mineral same time as income tax would be payable under section 113 of the tax. resource rent tax or petroleum resource rent tax due for the same year Income Tax Act, 2000. of assessment. (5) Subject to this section, the procedure in section 113 of the (2) An estimate filed under subsection (1) shall be in the Income Tax Act, 2000 shall apply to estimates and payment of manner and form prescribed estimating– instalments under this section as though mineral resource rent tax and petroleum resource rent tax were income tax. 48 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 49 Assessment of 46. (1) At the time an extractive industry producer files a (5) Subject to this section, Part XIII of the Income Tax Act, mineral and petroleum return of income under section 97 of the Income Tax Act 2000 the 2000 shall apply with any necessary adaptations to a return filed resource rent producer shall file a return of mineral resource rent tax or petroleum under subsection (1). tax. resource rent tax due for the same year of assessment. (6) A return filed under subsection (1) shall be treated as a (2) A return filed under subsection (1) shall be in the manner self-assessment but– and form prescribed specifying– (a) an assessment under section 102 of the (a) gross receipts, deductible expenditure, net Income Tax Act, 2000 may be levied with receipts, net expenditure, accumulated net respect to mineral resource rent tax or receipts and accumulated net expenditure for petroleum resource rent tax; and the year of assessment from the separate mineral or petroleum operation, as the case (b) a self-assessment under this section or an requires; assessment under section 102 of the Income Tax Act, 2000 may be amended under section (b) accumulated net expenditure for that 103 of the Income Tax Act, 2000. operation for the previous year of assessment (if any) as increased by any uplift available; 47. (1) The National Revenue Authority shall be responsible General Pri- for administering and giving effect to this Act. nciples of ad- (c) where the producer has accumulated net ministration. receipts for the year of assessment, the (2) This Act shall be administered in accordance with amount of mineral resource rent tax or rules and procedures contained in the following sections of the petroleum resource rent tax payable with Income Tax Act, 2000- respect to those receipts; and (a) section 96 of the Income Tax Act, 2000; (d) any other information the Commissioner- General may prescribe. (b) sections 106 to 112 of the Income Tax Act, 2000; (3) An extractive industry producer shall file a return under subsection (1) irrespective of whether any amount of mineral resource (c) section 115 of the Income Tax Act, 2000; rent tax or petroleum resource rent tax is payable for the year of assessment. (d) Part XVI of the Income Tax Act, 2000; (4) An extractive industry producer that calculates mineral (e) Part XVII of the Income Tax Act, 2000; resource rent tax or petroleum resource rent tax as payable for a year of assessment under subsection (2) shall pay that rent tax (less any (f) Part XVIII of the Income Tax Act, 2000; and instalments paid under section 45) at the time the return is filed. (g) Part XIX of the Income Tax Act, 2000. 50 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 51 (3) The rules and procedures referred to in subsection (3) Upon service of a notice under subsection (2), a lien on the (2) shall apply with necessary adaptations and, in particular, as though minerals and petroleum shall arise in favour of the Commissioner- amounts payable under this Act were income tax. General in accordance with section 107 of the Income Tax Act, 2000. (4) For the purposes of section 133 of the Income Tax Act, (4) The Commissioner-General may enforce payment of the 2000, the holder of a large-scale mining licence or petroleum licence amount referred to in subsection (1), by issuing distress proceedings shall maintain accounts and records for the mining or petroleum under section 109 of the Income Tax Act, 2000 against the minerals operations in accordance with generally accepted accounting and petroleum referred to in subsection (2). principles. (5) Where a holder of a mineral or petroleum right has minerals Assistance of 48. (1) For the purposes of this Act, the Commissioner- or petroleum seized by reason of tax due or pays tax due by a joint officers of Public bodies. General may request officers of a public body including bodies that holder of that right, the holder may recover any loss from the joint provide security to assist or protect officers of the National Revenue holder as a debt due. Authority in carryingout their functions under this Act. (6) A person who, without reasonable excuse, fails to comply (2) A public body that receives a request under with a notice issued under subsection (2) shall be treated as wilfully subsection (1) shall do its best to provide assistance within the limits evading tax for the purposes of section 154 of the Income Tax Act, of its authority and resources. 2000.

50. (1) A relevant licence holder shall - Financial (3) Without limiting the scope of subsection (1), officers Forecasts of a public body shall provide the National Revenue Authority with (a) on each of the occasions referred to in all necessary information and assistance, including for the proper subsection (2) and for each year of the assessment, audit and collection of all amounts due under this Act. projected life of the licence (including any potential for extension) prepare forecasts of– (4) Section 165 of the Income Tax Act, 2000 shall apply to a public officer providing assistance under this section with respect to (i) amounts, sources, methods, terms and all information and documents that, solely by reason of the assistance conditions of financing of operations provided, come into the public officer’s possession. under the licence; Prohibition on disposal

49. (1) This section shall apply where the holder of a mineral (ii) exploration, development and operating of minerals or petroleum right fails to pay any amount due under this Act costs as well as additional capital costs and petroleum including income tax. incurred after the commencement of commercial production; (2) Subject to subsection (1), the Commissioner-General may, in consultation with the National Minerals Agency or the (iii) production volumes and expected Petroleum Directorate, as the case requires, serve a notice on a holder conditions of sale, particularly with of a right prohibiting the disposal of any minerals or petroleum in the respect to price; holder’s possession until the outstanding amount has been paid. 52 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 53 (iv) production or profit sharing arrange- (3) Upon receiving forecasts under subsection (2), the ments, including expected distributions, Minister responsible for finance may, where the Minister considers it the policy on which distributions are to necessary, by notice in writing, require the licence holder to provide be based and the order of priority further and better particulars as to the forecasts and the licence holder between distributions and other shall provide those particulars within 10 working days of receiving payments (especially interest and the notice. repayment of debt); (4) If a relevant licence holder becomes aware of facts (v) taxes and other revenues to become that make the most recent forecasts referred to in paragraph (a) of payable to the Government of Sierra subsection (1) inaccurate in a material particular, then the licence holder Leone and the manner in which those shall immediately notify the Minister responsible for finance and amounts are calculated; and provide updated information. (vi) any other information as the Minister (5) A licence holder who fails to comply with the responsible for finance may prescribe; requirements of this section shall be deemed to be impeding the administration of this Act for the purposes of section 155 of the Income (b) use an appropriate template provided by the Tax Act, 2000 (applied by section 47). Minister responsible for finance in making the forecasts referred to in paragraph (a); and (6) Information received under this section may be used within the Ministry of Finance for revenue forecasting and public (c) have appointed, at all times, by written financial management purposes, but such information is otherwise notification to the Minister responsible for subject to the requirements of section 165 of the Income Tax Act, 2000 finance, an officer- with any necessary adaptations. (i) of sufficient seniority to be able to (7) In administering this section, the Ministry of Finance access the information referred to in shall coordinate with the National Mineral Agency and the Petroleum paragraph (a); and Directorate. (ii) who shall liaise with the Ministry of (8) In this section, “relevant licence holder” means the Finance regarding matters prescribed holder of a– by this section. (a) mining exploration licence, where the Minister (2) Forecasts under paragraph (a) of subsection (1) shall responsible for finance has notified the holder be prepared twice each year, stating the forecasts at dates and in writing that this section applies; forwarded to the Minister responsible for finance by dates specified by statutory instrument. (b) large-scale mining licence; or (c) petroleum licence. 54 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 55 PART VI –AMENDMENTS AND TRANSITIONAL PROVISIONS (ii) the uplift specified in paragraph 8 of the First Schedule for two years applied to Consequential 51. The Mines and Minerals Acts, No. 12 of 2009 is amended the 20 percent amount referred to in Amendments. as set out in the Third Schedule herein. subparagraph (i); and

52. (1) For the purpose of imposing mineral resource rent tax (d) for the third year of assessment after the Transitional a separate mineral operation shall not have accumulated net commencement year of this Act– Mineral resource rent expenditure for a year of assessment prior to the commencement (i) 20 percent of the relevant depreciated tax. year of this Act but expenditures referred to in subsection (2) may be historic cost and losses; plus claimed. (ii) the uplift specified in paragraph 8 of the (2) For the purposes of imposing mineral resource rent First Schedule for three years applied tax, expenditure for a separate mineral operation shall include the to the 20 percent amount referred to in subparagraph (i). following - (3) For the purpose of imposing mineral resource rent (a) for the commencement year of this Act, 40 tax, relevant deductible expenditure and relevant gross receipts percent of the relevant depreciated historic referred to in section 17 may include amounts incurred or derived cost and losses; prior to the commencement of this Act. (b) for the first year of assessment after the (4) The amounts referred to in subsection (3) shall meet commencement year of this Act- the seven year limitation referred to in section 17. (5) In this section– (i) 20 percent of the relevant depreciated historic cost and losses; plus (a) “historic cost” of an amount incurred by a person means the amount calculated in accordance with generally accepted (ii) the uplift specified in paragraph 8 of the accounting principles and specified in the First Schedule for one year applied to person’s audited financial accounts;; the 20 percent amount referred to in subparagraph (i); (b) “relevant depreciated historic cost and losses” for a separate mineral operation (c) for the second year of assessment after the means- commencement year of this Act– (i) the historic cost of all amounts for which (i) 20 percent of the relevant depreciated capital allowances are available in the historic cost and losses; plus commencement year of this Act with respect to the operation; minus 56 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 57 (ii) capital allowances at the rates provided FIRST SCHEDULE - MINES AND MINERALS for in paragraph 6 of the First Schedule Part I: Royalties since the amount was incurred (Section 3) (irrespective of whether those Royalty Rates allowances were actually granted or claimed); plus 1. (1) Subject to subparagraph (2), the following shall be the royalty rates for minerals- (iii) losses carried forward under the Income Tax Act and available for deduction in (a) 3% for minerals obtained pursuant to an artisanal mining calculating chargeable income from the licence; and separate mineral operation for the commencement year of this Act; and (b) in the case of minerals obtained pursuant to a mineral right other than an artisanal mining licence- (c) “commencement year of this Act” for a particular person means the person’s first year (i) 6.5% for precious stones other than special stones; of assessment that ends after the commencement of this Act. (ii) 8% for special stones; Transitional 53. (1) For the purpose of imposing petroleum rent tax, (iii) 5% for precious metals; and Mineral resource rent relevant deductible expenditure and relevant gross receipts referred ta x to in section 35 may include amounts incurred or derived prior to the (iv) 3% for other cases, including bulk minerals. commencement of this Act. (2) Samples of minerals obtained for purposes of assay, analysis or (2) The amounts referred to in subsection (1) shall meet other examination or testing shall be exempt from royalties, but royalties shall the seven year limitation referred to in section 35. apply if a sample is sold. PART VII –MISCELLANEOUS Market Value of Minerals

2. (1) The market value of minerals shall be the sale value receivable in a Regulations 54. The Minister responsible for finance may by statutory transaction meeting the requirements of section 95 of the Income Tax Act, 2000 instrument make regulations for giving effect to the provisions of (arm’s length standard) at the time of export, processing or delivery under a contract this Act. 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. 58 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 59 (2) The market value for a precious stone shall be- (b) the minerals are to be supplied under the contract over a period exceeding one year, (a) based on the current market prices for wholesale rough precious stones of that nature; and the method for determining the market value of the minerals supplied in a manner that is consistent with subparagraph (1) may be agreed with the Commissioner (b) determined as the highest of the values ascribed to the General, in consultation with the Minister responsible for finance and the National precious stone on evaluation by- Minerals Agency, by way of an advance pricing agreement issued as a private ruling under section 168 of the Income Tax Act, 2000. (i) the mineral right holder; Time for Payment of Royalties (ii) the Government evaluators; and 3. The holder of a mineral right shall pay royalties at the following times: (a) in the case of precious stones and special stones, at the (iii) an independent evaluator. time of evaluation referred to in paragraph 2(2), export or delivery under a contract of sale, whichever is earlier; and (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 (b) in the case of other minerals, the last day of the calendar and Mineral Resources, at the end of each week calculate the average price of month following export, processing or delivery under a precious metals exported or sold in Sierra Leone during a week based on spot contract of sale, whichever is earlier. prices realised at the end of each trading day: INTERPRETATION 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. In this Part– (4) Subject to subparagraph (5), the market value of bulk minerals shall “bulk minerals” means bauxite, rutile, iron ore, tantalum and other be the realised gross price for a sale free-on-board (fob) at the point of export from minerals as may be prescribed by regulations, but excludes Sierra Leone or point of delivery within Sierra Leone, as the case requires, provided precious metals and precious stones; and it meets the requirements of subparagraph (1). “precious metals” has the meaning given in paragraph (a) of the (5) Where- definition of “precious mineral” in section 1 of the Mines and Minerals Act, 2009. (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 60 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 61 PART II: INCOME TAX (5) Capital allowances granted with respect to a particular year of (Sections 4 and 7) assessment shall be taken in that year and cannot be deferred to a later year of Income Tax Rate assessment.

5. The income tax rate for mineral operations shall be 30%. (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 Capital Allowances assessment-

6. (1) Subject to subparagraph (4), all capital allowance expenditure (a) if the consideration received for the disposal exceeds the incurred in respect of mineral operations during a year of assessment is placed in written down value of the asset, the excess shall be a separate pool. included in calculating chargeable income from the mineral operations for the year; (2) Capital allowances are granted with respect to each pool at the rates provided for in subparagraph (3). (b) if the written down value of the asset exceeds the consideration received for the disposal, an additional capital (3) Capital allowances shall be granted for expenditure pooled under allowance shall be granted for the year in an amount equal subparagraph (1) for a year of assessment at the following rates: to the excess; and Year of Assessment Amount of Capital Allowance (c) the relevant pools referred to in subparagraph (1) shall be reduced by the written down value of the asset. In which expenditure incurred 40% of expenditure Second Year 20% of expenditure (7) In this paragraph- Third Year 20% of expenditure Fourth Year 20% of expenditure “capital allowance expenditure” means expenditure for which capital allowances are available, either under section 7 of this Act or (4) Capital allowances shall be granted for amounts included in the section 39 of the Income Tax Act, 2000; and adjusted cost base of a mineral right (including by reason of a reacquisition under section 9 and bonus payments) according to the following rules: “written down value” of an asset means the adjusted cost base of the asset less all capital allowances granted with respect to (a) each amount is allocated proportionately over the years of expenditure included in that cost. assessment from the year in which the amount is incurred until the year in which the term of the right expires; and (b) the capital allowance for each year is the amount allocated to that year. 62 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 63 PART III: MINERAL RESOURCE RENT TAX SECOND SCHEDULE - PETROLEUM (Sections 12 and 13) Part I: Royalties Mineral Resource Rent Tax Rate (Section 21) Royalty Rates

7. (1) The rate of mineral resource rent tax for a year of assessment is calculated by using the following formula: 1. (1) Subject to this paragraph, the royalty rates referred to in section 21 shall be as follows- 40 - Income Tax Rate (a) for crude oil - 10%; and 100 - Income Tax Rate (b) for natural gas - 5%. (2) For the purposes of subparagraph (1), the income tax rate shall be the rate specified in paragraph 5 for the year expressed as a whole number. (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 Uplift for Accumulated Net Expenditure 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

8. (1) The uplift referred to in section 13 shall be applied to accumulated (1). net expenditure for a previous year of assessment in the following manner- (3) Where Parliament ratifies a recommendation under subparagraph (2), the (a) in the case of a period of mining operations during the royalty rate referred to in section 21 with respect to the separate petroleum operation current year of assessment - 12.5% per annum applied to is the rate recommended. the period; and (4) The following are exempt from the payment of royalties: (b) in any other case - nil. (a) samples of petroleum obtained for assay, analysis or other examination or testing, but royalties shall apply if a sample (2) In this paragraph, a “period of mining operations” means a period is sold; and during which mining operations are conducted under a mining licence, including the period between the granting of a mining licence and the commencement of (b) petroleum that, with the approval of the minister mining operations if that commencement occurs within 60 days of the grant; but responsible for management of petroleum matters, is- excludes any period during which mining operations are suspended or unreasonably delayed. (i) flared or vented in connection with petroleum operations; or 64 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 65 Time for Payment of Royalties (ii) used directly in the same separate petroleum operation from which the petroleum is obtained.

3. Royalties with respect to petroleum obtained during a calendar month are payable on or before the last day of the following calendar month. (5) In this paragraph, “crude oil” and “natural gas” have the meanings given in section 1 of the Petroleum (Exploration and Production) Act, 2011. Part II: Income Tax (Sections 22 and 25) Income Tax Rate Market Value of Petroleum

4. The income tax rate for petroleum operations shall be 30%. Capital Allowances

2. (1) Subject to subparagraph (2), the market value of petroleum-

5. (1) Subject to subparagraph (4), all capital allowance expenditure incurred in respect of petroleum operations during a year of assessment is placed (a) shall be determined in accordance with the method in a separate pool. prescribed in the petroleum agreement, but (2) Capital allowances are granted with respect to each pool at the (b) shall not be less than the sale value receivable in a rates provided for in subparagraph (3). transaction meeting the requirements of section 95 of the (3) Capital allowances shall be granted for expenditure pooled under Income Tax Act, 2000 (arm’s length standard) without subparagraph (1) for a year of assessment at the following rates: discount, commission or deduction. (2) Where- Year of Assessment Amount of Capital Allowance (a) a petroleum right holder enters into a contract for the supply In which expenditure incurred 40% of expenditure Second Year 20% of expenditure of natural gas obtained under the right; and Third Year 20% of expenditure Fourth Year 20% of expenditure (b) the gas is to be supplied under the contract over a period exceeding one year, (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 the market value of the gas supplied shall be determined in a manner that is 27 and bonus payments) according to the following rules: consistent with subparagraph (1)(b) and the method for determining the market value may be agreed with the Commissioner General, in consultation with the (a) each amount is allocated proportionately over the years of Minister responsible for the management of petroleum matters, by way of an advance assessment from the year in which the amount is incurred pricing agreement issued as a private ruling under section 168 of the Income Tax until the year in which the term of the right expires; and Act, 2000. 66 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 67 (b) the capital allowance for each year is the amount allocated "capital allowance expenditure" means expenditure for to that year. which capital allowances are available, either under section 25 of this Act or section 39 of the Income Tax (5) Capital allowances granted with respect to a particular year of Act, 2000; and assessment shall be taken in that year and cannot be deferred to a later year of assessment. "written down value" of an asset means the adjusted cost base of the asset less all capital allowances (6) Where an asset for which capital allowances has been granted under granted with respect to expenditure included in that this paragraph is disposed of (or deemed to be disposed of) during a year of cost. assessment- Part III: Petroleum Resource Rent Tax (a) if the consideration received for the disposal exceeds the (Sections 29 and 30) written down value of the asset, the excess shall be Petroleum Resource Rent Tax Rate included in calculating chargeable income from the petroleum operations for the year; 6. (1) The rate of petroleum resource rent tax for a year of Royalties, assessment shall be calculated by using the following formula: taxes and other charges (b) if the written down value of the asset exceeds the consideration received for the disposal, an additional capital 58 - Income Tax Rate allowance shall be granted for the year in an amount equal to the excess; and 100 - Income Tax Rate (2) For the purposes of subparagraph (1), the income tax (c) the relevant pools referred to in subparagraph (1) shall be rate shall be the rate specified in paragraph 4 for the year expressed reduced by the written down value of the asset. as a whole number. (7) Where more than one separate petroleum operation is conducted with respect to the same petroleum right, allowances granted with respect to the Uplift for Accumulated Net Expenditure right and inclusions in income with respect to the disposal of the right shall be 7. (1) The uplift referred to in section 31 shall be applied to apportioned between the separate petroleum operations. accumulated net expenditure for a previous year of assessment in the following manner- (8) The apportionment mentioned in subparagraph (7) shall be as prescribed by regulations (with consultation of the PD) and in the absence of (a) in the case of a period of production activities regulations on the basis of the market value of the part of the petroleum right used during the current year of assessment - 15% in each separate petroleum operation at the time the allowance is granted or the per annum applied to the period; and inclusion in income, as the case requires. (b) in any other case - nil. (9) In this paragraph- 68 No. The Extractive Industries Revenue Act 2018 No. The Extractive Industries Revenue Act 2018 69 (2) In this paragraph, "period of production activities" The Income Tax Act 2000 ( Act No. of 8 2000) means a period during which production activities are conducted 2. The Income Tax Act, 2000 is amended by- under a petroleum licence, including the period between the approval of the development and operation plan and the commencement of (a) repealing and replacing section 21 with the following new section- production activities if that commencement occurs within 60 days of the approval, but excludes any period during which production 21. The manner in which this law applies to mining and petroleum activities are suspended or unreasonably delayed. operations shall be modified by the Extractive Industries Revenue Act, 2018."

THIRD SCHEDULE - CONSEQUENTIALAMENDMENTS (Section 50) (b) deleting paragraph (n) of subsection (2) of section 32; The Mines and Minerals Act, 2009 (Act No. 12 of 2009) (c) deleting section 42; 1. The Mines and Minerals Act, 2009 is amended (d) deleting the sixth schedule. Mining and petroleum (a) by repealing and replacing of section 148 with The National Revenue Authority Act, 2002 (Act No. 11 of 2002) opera tions the following new section- (3) The National Revenue Authority Act, 2002 is amended as follows- “148. A holder of a mineral right shall be subject to the following- (a) in subsection (1) of section 24 by repealing and replacing (a) royalties and mineral resource paragraphs (a) and (b) respectively with the following new rent tax as imposed by the paragraphs- Extractive Industries Revenue Act, 2018; (a) 3 per cent of the actual revenue collected annually other than royalties, income tax, (b) income tax as imposed by the resource rent tax (mineral and petroleum) and Income Tax Act, 2000 and bonus payments referred to in the Extractive modified by the Extractive Industries Revenue Act, 2018; Industries Revenue Act, 2018; (c) annual charges and other (b) a percentage to be specified from time to time amounts payable under this Act; by the Minister with the approval of Parliament, and of the revenue referred to in paragraph (a) for each year in excess of the estimate of that (d) without limitation or modifi- revenue in the estimates of Sierra Leone for cation, all other applicable taxes, the relevant year"; fees and charges, including those listed in the First Schedule of the (b) by inserting the following new paragraph immediately after paragraph National Revenue Authority Act, (f)- 2002." (b) by deleting sections 149, 150 and 151; “(g) a dedicated budget allocation for administration of the Extractive Industries Revenue Act, 2018"; (c) in subsection (1) of section 157 by replacing the words "Royalties, import duty and any (c) in the Schedule, by inserting the following new item immediately after annual charge" with the word "Amounts"; item 10- (d) by deleting subsection (3) of section 157. "11. Extractive Industries Revenue Act, 2018"