Parliament approves Levy to reduce taxes on mining companies’ gross production

Parliament has approved a new law reducing the Growth and Sustainability Levy on mining companies from 3% to 1% of gross production, in a move aimed at easing pressure on the sector.

The Law, passed on Friday, 13 March, is designed to soften the impact of Ghana’s revised royalty regime, which requires miners to pay more when global commodity prices rise.

Explaining the policy shift, Deputy Finance Minister Thomas Nyarko Ampem said the lower levy is intended to offset the effect of the new Minerals and Mining Royalties Regulation.

Under that framework, royalty payments increase in line with international gold prices.

He said mining companies will pay 5% royalties when the price of gold reaches US$1,900 per ounce.

If gold rises above US$2,000 per ounce, the royalty goes up to 6%, while prices exceeding US$4,500 per ounce would trigger a 12% royalty rate.

According to the deputy minister, reducing the levy is meant to serve as a balancing measure, particularly in periods when mining firms are exposed to what amounts to windfall taxation through the sliding royalty scale.

The legislation, however, did not pass without concern from the Minority.

Minority Leader Alexander Afenyo-Markin, who is also the Member of Parliament for Effutu, argued that Parliament should delay the bill because the reduction might not produce any meaningful relief for mining companies.

He suggested that cutting the levy from 3% to 1% may still fall short of significantly improving the cost position of firms operating in the sector.

Ghana’s sliding-scale royalty system links the amount mining companies pay directly to prevailing commodity prices.

That means firms pay more when gold prices are high and less when prices decline.

Although the model is intended to protect state revenue, critics say it can also raise production costs during commodity booms, potentially affecting investment decisions and employment in the industry.