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Burkina Faso: New Mining Code Adopted

(July 21, 2015) Burkina Faso’s National Transitory Council (Conseil National de la Transition, CNT, the country’s interim parliament) adopted a new mining code on June 26, 2015, to replace the 2003 code. (Anapaula Trindade Marinho, Burkina Faso, New Mining Code Adopted, TAX NEWS SERVICE (July 14, 2015), International Bureau of Fiscal Documentation online subscription database; Burkina Faso: Les collectivités locales bénéficieront de 1% du chiffre d’affaires des mines, BAYIRI.COM (June 27, 2015).) The new code substantially amends the taxation regime of the mining sector in general, with the purpose of collecting more revenue from it to increase public revenue as a whole and to fund local social and development programs. (Marinho, supra.) The 2003 code had been “considered very favorable to investors” the new one seeks to “maximize the benefits of mining for the state and local communities.” (Burkina Faso: Les collectivités locales bénéficieront de 1% du chiffre d’affaires des mines, supra.)

The main tax changes are:

  • mining license and industrial operations permit holders are to contribute, as a special contribution, 1% of their monthly turnover (excluding value-added tax, VAT) or 1% of the value of the products extracted during the month;
  • mining activity profits are subject to income tax under the regular taxation regime, with the tax incentives that had been given to the mining sector that had reduced corporate income tax and local taxes being generally repealed;
  • hydrocarbons will no longer enjoy exemption from VAT. (Marinho, supra.)

According to the head of the CNT’s Social Affairs Commission, the turnover of mining companies can collectively reach CFA francs 7 to 12 trillion (about US$12 to 20 billion) a year. (Burkina Faso: Les collectivités locales bénéficieront de 1% du chiffre d’affaires des mines, supra.) As of 2014, Burkina Faso was the fourth largest gold producer in Africa, after South Africa, Ghana, and Mali, and ranked third in exploration. (Id.; Department of State: 2014 Investment Climate Statement [Burkina Faso] (June 2014), at 16, U.S. Department of State website [click on 2014 under “Learn More” column on right side of page to view country list, then click on Burkina Faso].)

Since 2010, however, civil society organizations have crusaded for a new mining code that would take into account the development of riparian populations in mining exploitation zones. Pierre Dabiré, coordinator of the movement “Publish What You Pay,” stated, “[w]e think this is a great victory, a giant step. The former mining code was directed at investors, while the new code is more oriented towards the country’s development.” (Burkina Faso: Les collectivités locales bénéficieront de 1% du chiffre d’affaires des mines, supra.)

Despite its rich mining potential, reportedly more than 46% of Burkina Faso’s 17 million inhabitants live below the poverty line. (Id.) Moreover, according to the U.S. State Department, although the Burkina Faso government has made “substantial efforts to reduce child labor in the past few years, 42 percent of children in Burkina Faso continue to engage in child labor, particularly in agriculture and in the worst forms of child labor in mining.” (2015 Investment Climate Statement – Burkina Faso, U.S. Department of State website (May 2015).)

The President of Burkina Faso has 21 days from the date of adoption of the legislation to sign it into law. (Marinho, supra.)