Wednesday, 11th February 2004 (3514 views)

Some senior gold producers have today called for stability in the rules governing taxation in the industry, amid warnings that any changes to legislation may inhibit growth.

Bernard Swanepoel, chief executive at the Harmony Gold outfit, said that any changes to the gold industry tax formula that currently applies in South Africa could have consequences for the precious metal at a much wider level.

Addressing the Investing in African Mining Conference in Cape Town, Mr Swanepoel said that gold production projects such as the R1.3 billion Doornkop South Reef project would not be possible without the current tax rules.

'It has served this industry and this country well,' Business Report quoted him as saying.

Swanepoel pointed to the major expansion currently being enjoyed by the industry, citing Harmony's own construction of five new mines in SA, insisting that the current regime should be preserved.

Mr Swanepoel's views follow comments from the South African Revenue Service commissioner Pravin Gordhan who said earlier this month that the current tax formula, which was formulated 69 years ago, may be reviewed.

Under the existing rules, a gold company can offset its losses or its capital investments when it is making a profit.

However, if a mine is not making money, the company will pay less than the corporate tax rate of 30 per cent.

 

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