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Burundi: New Mining Code Replaces 1976 Law

(Dec. 18, 2013) On October 15, 2013, President Pierre Nkurunziza of Burundi assented to enactment of the country’s new Mining Code, which had been approved by Burundi’s Senate on October 10. (Anapaula Trindade Marinho, Burundi: Mining Code Enacted, TAX NEWS SERVICE (Dec. 9, 2013), International Bureau of Fiscal Documentation online subscription database; Burundi: Un nouveau code minier remplace celui de 1976 [Burundi: A New Mining Code Replaces that of 1976], BURUNDI-AGNEWS (Oct. 12, 2013).)

The new Code replaces the Mining Code that had been in force in the country since 1976. As Come Manirakiza, the Minister of Energy and Mines stated, “[t]he mining code that was into [sic] force in Burundi since 1976 didn’t separate the mining sector and the oil sector. This new code deals only with the mining sector.” He added that the new Mining Code “opens doors” to needed private investment in the mining sector in Burundi. (Burundi’s Assembly Passes Bill on Mining Code, BUSINESS STANDARD (Oct. 10, 2013).)

Under the new Code, mining permits will be granted only to legal persons headquartered in Burundi. Mining activities will in general be subject to the country’s corporate income tax and customs duties. Tax incentives available under the General Tax Code will be applicable to the mining sector, according to articles 148 and 150 of the Mining Code. (Marinho, supra.)

The Mining Code covers the following: all operations of prospecting, research, and industrial and artisanal mining exploitation, conversion, use, transport, trade, and closure of mines, involving mineral or fossil substances, thermal waters, and quarry products on the territory and in the territorial waters of Burundi, with the exception of liquid or gaseous hydrocarbons, which are governed by special laws. (Code minier du Burundi [Mining Code of Burundi], Loi No. 1/ 21 du 15 Octobre 2013 portant Code Minier du Burundi, art. 1, Presidency of Burundi website.)Artisanal exploitation” is defined as any non-permanent operation carried out on the surface and up to 30 meters’ depth, utilizing tools, methods, and non-industrial mechanical processes to extract and concentrate mineral substances with the aim of marketing them, without this exploitation being preceded by clear proof of a mineral deposit. (Id. art. 2(10).)

Fees are levied, according to the Code, on

1) the granting and renewal of prospecting licenses, research permits, and exploitation permits; the granting of quarry exploitation permits; and the granting of approval as an authorized trader for purchase, sale, and export of mineral substances (id. art. 144, ¶ 1);

2) the issuance by the relevant Ministry of any extract of a document with probative value issued by that Ministry in implementation of administrative and accounting regulations in force (id. art. 145, ¶ 1); and

3) a mining exploitation license or quarrying permit, levied as an annual area fee on licenses or permits valid on January 1 of a given year and calculated per hectare. (Id. art. 146; see also Marinho, supra.)

The amount and terms of payment of the fees referred to in (1) and (2) above are to be specified by separate regulation. (Code, arts. 144 ¶ 2 & 145 ¶ 2.)

The Code also provides for the imposition of an ad valorem tax on mining exploitation license holders, at the rate of 4% for basic metals, 5% for precious metals, 7% for gemstones, and 2% for other mineral substances. (Id. art. 147 ¶ 2.) The tax is recognized as an operating expense and is payable upon the first commercial transaction in relation to the taxable mining material or upon the transfer of this material to another establishment (even if owned by the same taxpayer). (Id. art. 147 ¶ 5.) The ad valorem tax is deductible for purposes of corporate income tax. (Marinho, supra.)

There is also an ad valorem tax on quarry and artisanal mine operators and on authorized traders for the purchase and sale of mineral substances. The tax rates are 3% for basic metals, 2% for precious metals, 2% for gemstones, and 1.5% for other mineral substances. (Id.; Code, art. 151 ¶ 1.) The taxable base and the classification of the mineral substances are provided in special regulations according to the type of ore. (Marinho, supra; Code, art. 151 ¶ 3.)