Capital allowances available and the future utilisation of tax losses in the mining industry in South Africa - a comparative study

Abstract

The South African government has recognised the important role that the mining industry plays in the local economy. Specific tax legislation focussing on the mining industry has been implemented in South Africa. In this study the capital allowances available to the mining industry and the utilisation of tax losses carried forward in South Africa as well as in four African countries, namely Ghana, Kenya, Tanzania and Zambia, are researched. The purpose of this study was to compare both the capital allowances available to the mining industry and the utilisation of tax losses carried forward in South Africa with the capital allowances and utilisation of tax losses carried forward and available to the mining industry in four African countries, namely Ghana, Kenya, Tanzania and Zambia. The objectives of the above comparison was to firstly evaluate whether the capital allowances and utilisation of tax losses carried forward and available to the South African mining industry are comparable with those available in Ghana, Kenya, Tanzania and Zambia. Secondly, the objective of the comparative study was to identify capital allowances available to the mining industry in Ghana, Kenya, Tanzania and Zambia, but not available in South Africa. It was found through this study that the capital allowances available and the utilisation of tax losses carried forward in the mining industry in South Africa are in many instances on par and in some instances even exceed the allowances available in Ghana, Kenya, Tanzania and Zambia. Certain Zambian tax provisions were identified that were not available in South Africa, namely the indexation of capital allowances and tax losses in the mining industry to compensate for the fluctuation of the Zambian local currency to the US Dollar The South African government could consider implementing these allowances to further stimulate the mining industry in South Africa. Copyright