University of Rwanda College of Arts and Social Sciences LLM in Business Law LEGAL ANALYSIS OF THE MINERALS TAXATION REGIME UNDER RWANDAN LAW Thesis Submitted in Partial Fulfilment of Academic Requirements for the Award of the Master’s Degree in Business Law

University of Rwanda
College of Arts and Social Sciences
LLM in Business Law
LEGAL ANALYSIS OF THE MINERALS TAXATION REGIME UNDER RWANDAN LAW

Thesis Submitted in Partial Fulfilment of Academic Requirements for the Award of the Master’s Degree in Business Law.
Prepared By UCYEYE Marie Louise

SUPERVISOR: Dr. Mbembe Binda Elvis
September 2018
DECLARATION
I, Ucyeye Marie Louise, declare that this thesis is my own work, unless referenced otherwise, and has been submitted for the Award of the Master’s Degree (LLM) in Business Law from the College of Arts and Social Sciences, School of Law of the National University of Rwanda.
Ucyeye Marie Louise
Signature

DEDICATION
To my Lovely Husband and our Daughter
To my Mother
To my Brother and Sister
To all my Friends and Relatives

AKNOWLEDGEMENTS
It is with great pleasure for me to extend my gratitude to those who so generously contributed to the work presented in this research.
My special thanks goes to my supervisor Dr. Mbembe Binda Elvis for his amazing experience and contribution during my research.

Similar profound gratitude goes to my husband Jean Pierre FATIKARAMU for his constant faith in my work, and for his unbelievable support during my research.
UCYEYE Marie Louise

Acronyms
CFSP: Conflict-free Smelter Program
CIF: Cost Insurance and Freight
COPIMAR: Coopérative de promotion de l’industrie Minière Artisanale au Rwanda
DRC: Democratic Republic of Congo
EAC: East African Community
EDPRS: Economic Development and Poverty Reduction Strategy
EITI: Extractive Industries Transparency Initiative
FECOMIRWA: Fédération des Coopératives Minières du Rwanda
FOB : Free on Board
GDP: Gross domestic product
GMD: Geology and Mines Department
ICGLR: Certification Mechanism for Minerals in Rwanda
ITRI: International Tin Research Institute
iTSCi : Joint Industry Traceability and due Diligence Programme
LME: Metal Exchange
MDA: Mining Development Agreements
MINICOM: Ministry of Commerce
MINIRENA: Ministry of Natural Resources and Environment
PSF: Private Sector Federation
REDEMI : Régie d’Exploitation et de Development des Mines
REMA: Rwanda Environment Authority
RMA : Rwanda Mining Association
RMIF: Rwanda Mining Investment Forum
RRA: Rwanda Revenue Authority
RSSB: Rwanda Social Security Board
SDGs: Sustainable Development Goals
SOMIRWA: Société Minière de Rwanda
UNEP: United Nations Environment Programme
Table of Contents TOC o “1-3” h z u
ACRONYMS PAGEREF _Toc525737993 h 5TABLE OF CONTENTS PAGEREF _Toc525737994 h 6ABSTRACT PAGEREF _Toc525737995 h 8GENERAL INTRODUCTION PAGEREF _Toc525737996 h 91.PROBLEM STATEMENT PAGEREF _Toc525737997 h 102.RESEARCH QUESTIONS PAGEREF _Toc525737998 h 113.SIGNIFICANCE OF THE STUDY PAGEREF _Toc525737999 h 114.METHODOLOGY PAGEREF _Toc525738000 h 125.SCOPE OF THE RESEARCH PAGEREF _Toc525738001 h 126.OUTLINE PAGEREF _Toc525738002 h 13CHAPTER 1: LEGAL AND INSTITUTIONAL FRAMEWORK OF MINING SECTOR AND MINING TAXATION IN RWANDA PAGEREF _Toc525738003 h 14I.1. Historical Background of Mining in Rwanda PAGEREF _Toc525738004 h 14I.2.1.1. Law on mining and quarry operations PAGEREF _Toc525738005 h 16I.2.1.2. Law on minerals taxation PAGEREF _Toc525738006 h 17I.2.1.3. Ministerial order on financial guarantee for environmental protection PAGEREF _Toc525738007 h 18I.2.1.4. Ministerial order on to the application, issuance and use of mineral and quarry licenses. PAGEREF _Toc525738008 h 18I.2.1.5. Ministerial order on categorisation and types of mines PAGEREF _Toc525738009 h 19I.2.1.6. Ministerial order on regional certification mechanism of icglr PAGEREF _Toc525738010 h 19I.3. International legal instrument in relation to mining PAGEREF _Toc525738011 h 21I.4. Mining sector fiscal incentives for investment facilitation PAGEREF _Toc525738013 h 22I.5.1. Ministry of Trade And Industry PAGEREF _Toc525738014 h 23I.5.2. Rwanda Mines, Petroleum And Gas Board PAGEREF _Toc525738015 h 23I.5.3. Rwanda Development Board PAGEREF _Toc525738016 h 24I.5.4. Rwanda Environment Management Authority PAGEREF _Toc525738017 h 25I.5.5. Rwanda mining association PAGEREF _Toc525738018 h 25CHAPTER II: LEGAL ISSUES IN MINING TAXATION REGIME OF RWANDA PAGEREF _Toc525738019 h 27II.1. Double taxation due to seller and exporter PAGEREF _Toc525738022 h 27II.2. Traceability and due diligence cost PAGEREF _Toc525738023 h 29II.3. Multiple fees to mining business operators PAGEREF _Toc525738024 h 31II.4. Regional context of mining tax regime PAGEREF _Toc525738025 h 34II.4.1. Mining taxation in DR Congo PAGEREF _Toc525738026 h 34II.4.2. Mining taxation in Uganda PAGEREF _Toc525738027 h 35II.4.3. Mining taxation in Kenya PAGEREF _Toc525738028 h 36II.4.4. Mining taxation in Tanzania PAGEREF _Toc525738029 h 37BIBLIOGRAPHY PAGEREF _Toc525738030 h 41
Abstract
Mining sector is one of the key income source that supports Rwandan economy. The national bank of Rwanda report states that the good performance of Rwandan economy through exports in 2016 and 2017 was mainly been driven by minerals export (+156 percent). Its regulation needs special attention since Rwanda government expect to earn from mining business a total of $600 million (over Rwf510 billion) in 2019. However, this would not be realised while investors and operators are not comfortable with existing policies and laws especially those relating to taxation regime. It against this context that researcher in this study tried to look and assess issues and gaps around mining sector legislation with special regard to taxes , fees and other operational expenses in mining business. The study raises awareness of both policy makers and mining sector operators about the emerging issues in mining taxation regime and its effects to mining and private sectors development in general.

GENERAL INTRODUCTION
During the world’s financial crisis of 2007-2010, the United States of America initiated different changes to the financial legislative framework. The most important reform was the Dodd–Frank Wall Street Reform and Consumer Protection Act (known as Dodd-Frank Act), which came into force in 2010. Within this legal framework, companies especially those operating in the Great Lakes Region were obliged to disclose information on the use and origin of conflict minerals such as tantalum, tin, gold or tungsten. With this section of the Dodd-Frank Act, the American Congress sought to address the problem of so-called conflict minerals causing violence and destitution in the DRC. Looking at the Dodd-Frank Ac, it was seeking to prevent the financing of armed groups through the exploitation and trade of minerals in the Great Lakes Region. As for the case in other countries, it is obvious that the Dodd-frank policy affected much on the mineral exports in Rwanda because companies operating in Rwanda for them to access the market were supposed to go through established mines supply chain traceable.

In 2013, Rwanda government adopted the law on mineral tax (law no 55/2013) with rates complained to be high by taxpayers and other minerals operators compared to other mineral tax rate in the region (royalty tax). Further the law came with different important provisions for which implementation would be challenging to investors and mineral businesses operators. The establishment of the law on mineral tax in Rwanda the legislator did not consider the provisions under Dodd-frank act, which was existing since 2010 where cost of traceability and the whole process of mineral supply chain could not be friendly to mineral businesses.

Generally, tax observance is progressively taking up an important position in business management. In nowadays world, tax is seen as one of the main risks of any business. The management is spending more time on tax compliance, or worse, on the effect of non-compliance. Rwandan Tax authorities are becoming more firm as they look into improving compliance and boosting revenue collection. It has put in place tax laws in order to facilitate the collection of taxes and strengthen observance of tax laws. . In this area, the minerals taxation requires the strong regulation aiming at fighting against fraudulent practices. The government of Rwanda is intending to enhance the minerals taxation because the mining sector remains the second highest foreign exchange earner after tourism. It obviously that since 2012 until now the minerals have been upgraded to generate highest earnings to the country through the taxation. This research carries out a wide analysis of the impact of minerals tax regulation in Rwanda. It aims at raising awareness of policy makers and mining business operators about the existing issues relating to mining taxation. The law relating to minerals tax in its article 9 states the date that tax on minerals is due (the date of exportation of minerals). It states that the date of customs export declaration of minerals shall be considered for the purpose of the law as the date on which the minerals are exported. However, article 4 of the same law states that any person who sells minerals shall pay tax on such minerals. These two statements in both articles constitute the main issue and the rationale of this research in the way that there is obviously contradiction among those provisions and the researcher would like to put them on track and advise-on different amendments possibilities that can make clear the mining taxation regime.
PROBLEM STATEMENTDespite the fact that there are various legal provisions and administrative mechanism put in place to control the fraudulent practices and confusion of tax law, the implementation of these mechanisms remains questionable. Further, the issue of introducing a royalty tax at high rate in mining industry discourages investors in minerals business. The tax of 4% on ordinary minerals and 6% on precious metals looks being unaffordable royalty tax on minerals because high taxes can slow-down profits of companies, which could lead to limited growth of sector.

With the law No 55/2013 of 02/08/ 2013 on minerals tax, the royalty tax on different categories of minerals was initiated. Issues arise in determining who pays the tax and when is that tax due? Article 4 states that any person who sells minerals shall pay a tax on such minerals while article 9 on the other side says mineral tax is due at the exportation date. However, any person who sells the minerals is not necessarily an exporter.

In addition to that, in the effort of complying with the Dodd frank act stipulated above Rwanda has adhered to two traceability schemes that include the iTSCi scheme, which is a program that started in 2011 in Rwanda and Katanga (DRC) as part of national and international efforts to address the challenges of the link between minerals and conflict.
Following the engagement to put in place a regional certification mechanism for exploitation, monitoring and verification of natural resource in the great lakes region, Rwanda has also adhered to the ICGRL tracking and certification scheme . The implementation of the above two schemes generates other operational fee that minerals traders incur.
It is also important to consider other existing operational cost that are established in different legal instruments at national level such as fee related to the mining and minerals trading certificates, fees for the financial guarantee of environmental protection,
License for purchasing and selling minerals substances in Rwanda and its impact to mining business sector investment shall be analysed and discussed to come up with clear recommendations. It brings us to wonder whether the issue behind all the companies’ business closing since the adoption of the royalty tax on minerals (phoenix metals, NRD, TAMS ltd) was not resulting from the above mentioned due expenses that would make us suspect if mineral tax system in Rwanda has not fallen under the adage “too much tax kills the tax”.

RESEARCH QUESTIONSConsidering the purpose of this study, the research questions that this study intends to find answers to are the following:
What is the current regime of tax on minerals in Rwanda?
What are main legal issues related to taxation that affect the mining sector in Rwanda?
SIGNIFICANCE OF THE STUDYThis study is significant to a cluster of beneficiaries among them the taxpayers, investors and government of Rwanda. It serves as a tool of raising their awareness vis-a-vis the current law provisions such as article 4 and 9 of the law nº 55/2013 of 02/08/2013 on minerals tax. Furthermore, the study contribute significantly to awaken the conscience of policy and lawmakers to consider harmonization of the current existing policy and legislation on mineral taxes in Rwanda. The study serves as an advocacy paper (tool) to government regarding the current challenges that minerals companies are facing in the implementation of the law on mineral tax.

METHODOLOGYIn order to identify the above-mentioned issues, we made recourse to various methods and techniques that facilitated us in collecting information on key elements that formulate the basis of this study. For methods, the researcher substantially used the desktop method in order to analyze, interpret and explain legal instruments that tackle the topic with the purpose to understand the scope of legal provisions). The analytical method was also used with the intention to analyse the obtained data availed by the research and finally the synthetic method in order to summarize the research findings to make it more clear and understandable.

As far as techniques are concerned, the researcher mainly used the documentary technique or literature review to find useful ideas from other researchers and authors on this topic. The researcher reviewed books, laws, internet data and other written information likely to provide necessary and appropriate information.

It was also quite important for this research to use comparative method to identify, analyse and explain similarities and differences across between different taxation regimes in the region where Rwanda is located (e.g. East Africa Region).
SCOPE OF THE RESEARCHThis study intends to analyse legal issues related to taxation in the mining industry in Rwanda. The research is limited to the scope of general legal framework on mining sector in Rwanda with the particular focus on taxation; special emphasis is made to the Law Nº55/2013 of 02/08/2013 on minerals tax and other legal instruments. Therefore, in order to remain in the line of the taxation field, researcher opted to go through the aforementioned methodology of desk review of existing literature on mining taxation and comparative analysis to other similar situations in the region to assess the differences and legal implication can this cause in regard to mining investment promotion and development.

OUTLINE
This study is divided into two chapters preceded by a general introduction and looped by a conclusion and recommendations; chapter one treats the legal and institutional framework of mining industry in Rwanda. This chapter will be devoted to the theoretical aspect and general overview of mining sector; chapter two discuss the main legal issues affecting the mining sector it shall carryout a critical analysis of mineral taxation issues under Rwandan law by pointing out different aspects constituting issues and challenges to mining taxation regime.
CHAPTER I: LEGAL AND INSTITUTIONAL FRAMEWORK OF MINING SECTOR AND MINING TAXATION IN RWANDA
The government of Rwanda has identified the mining sector as a key revenue generator in Rwandan economy; it has put in place regulation mechanism including mines taxation regime in order to ensure sustainable development of the sector and its contribution to the national economy growth.
Considering the importance of mining industry in the world and especially in Rwanda, it is necessary to examine the current situation of the legal and institution framework related to mining and its taxation regime in particular. Under this chapter three different sections are discussed:(1) Historical background of the mining sector in Rwanda; (2) Legal framework of mining sector in Rwanda and taxation regulations; (3) Institutional framework that is put in place to play various role over the management of mining sector in Rwanda.

I.1. Historical background of Mining in RwandaAs a result of the geological study conducted in Rwanda 1926, considerable cassiterite deposit was identified and developed in Gatumba. Other significant cassiterite and wolframite deposit discoveries has followed and this marked the backbone of the current Rwanda mining sector.

According to the United stated survey of 2014, Rwanda is still rich in minerals. The most noticeable are the rare metals of cassiterite, tungsten and coltan commonly known as the 3 T( Tin, Tungsten and Tantalum).
The mining sector underwent a recovery following the 1994 genocide against Tutsi in Rwanda. More efforts were put in development of the sector and privatisation was initiated as one of means in the process. It was necessary to regulate and supervise the sector that was likely to become one of the possible revenue stimulator. In 2004 the government developed and started to implement a mining policy that intended to address the gaps that were in the legal framework, operational skills and capacity.
This policy was later replaced by the mining policy of 2010. Further, formalisation efforts were initiated by the formation of the Rwanda mining sector association gathering all mining players in Rwanda.
The government supported the sector development through publishing a new mining law in 2008, which was then replaced by the one of 2014, replaced on its turn by the recently published law no 58/2018 of 13/08/2018 on mining and quarry operations. The development of national mining policy in 2010 as well as through state-financing regional and national-scale mineral exploration and prospection activities and implementation of supply chain due diligence measures and outlined below.
The mining sector in Rwanda has recorded a greater growth and its level of investment in artisanal and small-scale operations is becoming typically low, with significant investment at larger operations. By 2014, Rwanda has issued about 548 mining licences to about 213 legally recognized mining companies and cooperatives. Those licences vary in size, up to 400 hectares. Of those 213 mining entities 38 are cooperatives and members of FECOMIRWA, 5 companies are either wholly foreign owned or in joint ventures with government, with the remaining 170 locally owned small companies or cooperatives non-affiliated with FECOMIRWA.

In addition to the mining companies and cooperatives possessing exploration or exploitation permits, the mineral supply chain is currently undergoing a transitional phase in which a previously existing internal trader tier is transitioning either to become an exporter or out of the legal mineral trading business altogether. There are currently 26 officially recognized exporters. In terms of current export values, production and export of cassiterite, coltan and wolframite concentrates have become a key motor of the Rwandan economy, with revenue presumed to facilitate augmented growth and potential for economic transformation.

In 2016, Rwanda was the eighth-largest producer of tungsten in the world (Index Mundi, 2013). Revenues derived from exports of the 3Ts and gold are currently second highest among all sectors nationally (USD 149 million in 2015), after tea and coffee. So far, the following major gaps were also identified in mining sector investment in Rwanda:
Both the Rwanda Development Board (RDB) and the Ministry of Natural Resources (MINIRENA) need to better understand the needs of potential investors and existing investors, especially regarding geological data and mineral potential.
The lack of digitized existing detailed geological data is another challenge, as is how detailed information is presented and accessed. While to some investors the available data is sufficient, other investors find that it lacks the level of detailed resource evaluations to justify investment.

The mining sector in Rwanda has seen limited direct foreign investment to date, which results in low capacities in the following areas: managing capital investments; mine planning and efficient mining; mineral processing recovery; securing steady markets; mitigating mineral price fluctuations; and implementing mining policies and legal provisions.

There is a lack of harmonization across ministries, as RDB’s priorities of energy; manufacturing, communications and technology, and tourism do not clearly prioritize mining despite it being the second-highest foreign exchange earner and a key funding sector for Rwanda’s poverty reduction-strategy.

I.2. Legal Framework of Mining sector and mining taxation
The legal framework in mining sector in Rwanda is made-up by national legal instruments adopted to govern the mining operations; mining policy as international legal instruments relating to mining and environmental protection, that Rwanda has so far ratified.
I.2.1. National instruments governing mining sector
Rwanda as country has put in place the legal framework of mining industry that comprises different laws and ministerial orders adopted to regulate the management of mineral exploitation, trade and taxation. Different policies adopted in relation to mining industry in Rwanda have also been consulted in this section to compliment information about the established legal framework.
I.2.1.1. Law on Mining and Quarry Operations
All operations relating to mining and quarry in Rwanda have been governed by the lawNo 13/2014 relating to mining and quarry operations. It is until recently when the Rwanda decided to review it and adopted the law N° 58/2018 of 13/08/2018 on mining and quarry operation, the purpose of this new law is to govern mining and quarry operations in Rwanda. The review of this law was motivated by the particular need of environment protection, health and safety.

The established law contains general principles that apply to mining and quarry operations that include the following:
all rights of ownership and control of minerals or quarry products in, under or upon any land in Rwanda are vested in the State notwithstanding personal ownership of land and other properties thereof;
mineral exploration, exploitation, processing and trading are carried out by a person who has been granted a license in accordance with the Law on mining and quarry operations;
Prior to the commencement of operations, submits to the competent authority an environmental and social impact assessment approved by the relevant public organ.

It is crucial to mention that whereas the previous law on mining and quarry operations implementation channel was vested in various orders the current law implementation instrument shall be the regulation of the competent authority. In its article 68, the new law provides for the validity of the existing orders and regulation in force under the mining law. It states that orders and regulation implementing the law No 13/2014 of 20/05/2014 on mining and quarry operations continue to be in force in all their provisions that are not substantially contrary to the new law until they are repealed.

This explains why the researcher has referred to those orders existing prior the publication of the new law related to mining and quarry operation while exploring the legal framework of the mining sector in Rwanda.

I.2.1.2. Law on Minerals Taxation
In 2013, Rwanda published the law no 55/2013 of 02/08/2013 on minerals tax. This law establishes a particular tax that applies particularly to the mining sector in Rwanda.

This law has introduced the mineral royalties that are fixed as follows: 4% of the norm value applies to base metals and other minerals substance of the kind and 6%of the norm value, which applies to precious metals of gold and other precious metals of the kind
This law is at the centre of this study due to its direct implication to the researcher’s concern.

I.2.1.3. Ministerial Order on Financial guarantee for environmental protection
In the implementation of the law no 13/2014 of 20/05/2014 on mining and quarry, the ministry of environment has established a ministerial order no 001/2015 of 24/04/2015 determining the modalities and requirements of financial guarantee for environmental protection in mining operations. This Ministerial order recognises the serious challenge of mining operations concerning environment protection. It is in this context that article three (paragraph 1) of this ministerial order, states that the guarantee shall be determined based on the general amount budgeted for the environmental protection plan on environmental impact assessment.
Although the law that constitute the basis of this ministerial order has been repealed, and that it is stated in the current law on mining and quarry operation that the nature and amount of environment rehabilitation guarantee and modalities for depositing it are determined by regulations of the competent authority. This Order is still binding in accordance with the provision of article 68 of the mining law of 2018, which stipulates that Orders and regulations implementing the law on mining and quarry operations of 2017 continue to be in force in all their provisions that are not substantially contrary to the current law.

I.2.1.4. Ministerial Order on to the application, issuance and use of Mineral and quarry licenses.The ministerial order no 003/2015 of 24/04/2015 was established to determine modalities for application, issuance and use of mineral and quarry licenses. The purpose of this order is to determine the modalities for: application of the minerals license, transfer of a mineral license between holder thereof and the third party, application for renewal of mineral license, application and grant or renewal of a quarry license. It determines as well requirements and conditions for transfer for quarry licenses, content of reports and their intervals, non refundable fee to be paid by applicants for grant, transfer and renewal of mineral or quarry license, annual fee to be paid by holder of a mineral or quarry license for the surface area covered by the license.

The order presents in detail the whole process from the application to issuance of the license including the environmental impact assessment process. It is important to note that the recently published law on mining and quarry operation stipulates that the regulation of the competent authority shall determine the modalities and requirements for a minerals license application. Which means that in the near future a new regulation may be put in place on the matter.

I.2.1.5. Ministerial order on Categorisation and types of Mines
According to the United States Geological Survey of 2014, it was established that Rwanda has a variety of minerals in its underground. The most exploited are the 3T, Tin, Tungsten and Tantalum. In connection with the law establishing the minerals tax of 2013, the ministerial order no 002/2015 of 24th April 2015 determine the criteria considered in categorisation and types of mines. It is established in order to make clear different types of mines and their category. Its highlights from article 3 to 14; three (3) different categories of mines: Artisanal mine, small small-scale mine and large-scale mine as well as their amount of capital investment. The order also determines criteria used to evaluate categories of mines, which is the quantity in tones produced each month.
I.2.1.6. Ministerial Order on Regional Certification Mechanism of ICGLR
The government of Rwanda has recognised the international community worry regarding conflict minerals from the Region of Great Lakes, and the impact the provisions of the United States Dodd-Frank wall street reform and consumer protection Act was to have on the access to the international market of Rwandan Minerals. In order to respond to this Rwanda government adopted the Ministerial Order no 002/2012 of 28/03/2012 to consider Regional Certification Mechanism (RCM) managed by the International Conference on the Great Lakes Region (ICGLR). The order mainly states the application process for regional certification mechanism, the permission to import and export designated minerals as well as mechanisms of mines inspection.
I.2.2. Place of Policies in mining
The first Rwandan policy on mining and geology was defined in 2014 it was then updated in 2010. This policy focuses on the proper management of mining resources in order to contribute sustainably and adequately to the reduction of poverty and economic growth. It set guidelines for responsible exploitation of resource.. The ministry and mineral policy of Rwanda, 2017 is currently undergoing public consultations and will guide further strengthening of Rwanda mining governance.
I.2.2.1. Rwanda Vision 2020
Vision 2020 is a policy statement on the long-term development aspirations of the government and the implications for the country’s occupants as it is Rwanda’s National strategy. The mining industry was not left behind as per chapter four of the strategic paper 2004 relating to industry and mining, to achieve Vision 2020 industrialization and human resource development are part of the Government’s strategies that are put in place.
I.2.2.2. EDPRS II
The Economic Development and Poverty Reduction Strategy (EDPRS), which is currently in its second phase, focus on economic growth and prioritise the environment. The EDPRS II recognize the place of mining sector as a new investment opportunity that is attracting potential investors in Rwanda.
The coordination of the mining industry requires more institutional capacity as well as the laws to regulate different operations in mining industry. It is in this regard that many laws have been put in place in order to keep pace with mining industry development. In this section, different laws and ministerial order currently regulating the mining sector in Rwanda are well outlined with their purpose of existence.
I.3. International legal instrument in relation to mining
Rwanda has ratified several international legal instruments that are relevant to mining sector development including but not limited to the following international protocols and conventions:
In its preamble, the Rwandan constitution reaffirms the adherence to the principles of human rights enshrined in the united nations charter as well as in the core international human rights instruments.
In its preamble, the Rwandan constitution reaffirms the adherence to the principles of human rights enshrined in the United Nations Charter as well as in the core international human rights instruments. With regards to the international labour organisation, Rwanda has ratified all eight fundamental human rights conventions, two of the Governance Conventions (C081 on Labour Inspection and C122 on Employment Policy) and 18 of the 177 Technical Conventions.
Rwanda is part of the International Conference on the Great Lakes Region (ICGLR) which includes commitment to 10 Protocols and four programs of action with 33 priority projects, of which the following are legally binding related to mining:
Protocol on Democracy and Good Governance
Protocol Against the Illegal Exploitation of Natural Resources
Protocol on the Specific Reconstruction and Development Zone
Protocol on the Property Rights of Returning Persons
Multilateral Environmental Agreements (MEAs) ratified by Rwanda include the United Nations Framework Convention on Climate Change (UNFCCC), the RAMSAR Convention on Wetlands of International Importance, Vienna Convention for the protection of the ozone layer, Stockholm Convention on Persistent Organic Pollutants, and the Convention on Biological Diversity.
International Conventions of relevance to Mining that Rwanda has ratified include:
Convention for the Protection of Cultural Property in the Event of Armed Conflict with Regulations for the Execution of the Convention. The Hague, May 14, 1954.

Convention on Technical and Vocational Education. Paris, November 10, 1989.

Convention concerning the Protection of the World Cultural and Natural Heritage. Paris, November 16, 1972.
Convention on the Means of Prohibiting and Preventing the Illicit Import, Export and Transfer of Ownership of Cultural Property. Paris, November 14, 1970.

Convention on Wetlands of International Importance especially as Waterfowl Habitat. Ramsar, February 2, 1971.

Convention on the Protection and Promotion of the Diversity of Cultural Expressions. Paris, October 20, 2005.

Convention for the Safeguarding of the Intangible Cultural Heritage. Paris, October 17, 2003.

Convention on Mercury, but this process is underway.
Rwanda is not yet a signatory to the United Nations Environment Programme (UNEP) Minamata
I.4. Mining sector fiscal Incentives for investment facilitation
According to the law No 06/2015 of 28/03/2015 relating to investment promotion and facilitation it is provided that, a registered investor meeting required conditions shall be entitled to special incentives as provided in the annex of that law.
This section presents all advantages realised for mining capital investment installation and start up activities:
0% Corporate Income Tax for Mining companies planning to relocate H/Q’s to Rwanda;
Corporate Income Tax Holiday up to 7 years for investment of at least US$ 50 million
15% Preferential Corporate Income tax for projects exporting processed minerals up to 50% of turnover of minerals produced in Rwanda
Investment allowance of 50% or Accelerated depreciation of 50%
Capital Gains tax exemption and free repatriation of Capital and assets
Import free on Heavy Machinery used in Mining
Vat exemption on Mining equipment’s.

I.5. Institutional framework of Mining Sector
Mining sector as one of the key resource generating and aspect of Rwandan economy, the mining regulatory framework is set through established hierarchy by the government. The institutional framework that was established to regulate the mining sector activities in Rwanda is made-up with one Ministry, the Ministry of trade and industry in charge of licensing and different public institutions given a mandate to facilitate mining activities and mining investment process. This section analyses in-depth different institutions and their mandate with regard to mining and minerals trading in Rwanda.
However, it is important to mention that the special mandate of mining sector supervision has been granted to the Rwanda mining petroleum and gas board, which reports directly to the office of the president via the minister in the president’s office.
I.5.1. Ministry of Trade and Industry
The Ministry of trade and commerce is responsible of granting buying and selling permits to Minerals traders. According to article 2 of ministerial, order no 003/miniform2010 of 14/09/2010 determining the requirement for granting the licenses for purchasing and selling mineral substances in Rwanda. It is stated that: “except for holders of an official mining license a copy of which is held by the Ministry of commerce, any individual or entity wishing to deal in minerals shall apply to the Minister In Charge Of Commerce for a license to open a mineral trading post, specifying types of minerals he intends to sell”. This grants to MINICOM the power to issue the Minerals purchasing and selling permits, and in collaboration with RMB, it assess the eligibility of each application for the license. The department of trade and investment in the unit of domestic trade is in charge of coordination of license issuance and works hands in hands with Rwanda Mining Petroleum and Gas Board.
I.5.2. Rwanda Mines, Petroleum and Gas Board
Established in February 2017, RMB is the Government of Rwanda body responsible for implementing, advising the government on issues related National policies, laws, and strategies related to mining, petroleum, and gas. It is mandated to supervise, monitor and coordinate the application of national policy and strategies related to mines, petroleum and gas.
In addition to monitoring, it is supposed to carryout research ; exploration in geology, mining and petroleum and do disseminate the findings. Further, the RMB is supposed to supervise and regulate private or public institutions involved in mining, trade and value addition in menral operations.Lastly, RMB is to cooperate and collaborate with other regional and international institutions carrying out similar mission.

The Board has among others the following main mission:
To ensure the implementation of National policies, laws and strategies concerning mines, petroleum and gas ;
To provide advice to the government on issues pertaining to mining, petroleum and gas;
To ensure monitoring and coordination of strategy implementation related to mine, petroleum and gas;
To carry research in geology, mining, petroleum and gas and disseminate research findings;
To conduct mineral, petroleum and gas resources exploration operations in the country;
To advise on the establishment of standards and regulations in mines, petroleum and gas;
To control and monitor public and private entities conducting mining, trade and value addition of minerals operations,
To assist the Government in the valuation of mining and quarry concessions;
.
It currently implements the tagging system in collaboration with the international Tin Research Institute a system that is used in the traceability of minerals supply chain from the mine to the last consumer
I.5.3. Rwanda Development BoardThe Rwanda Development Board has a key role in the development of the Mining sector in Rwanda. In line with its mission of : promoting local and foreign direct investment providing guidelines, analyze project proposals and follow up the implementation of Government decisions in line with public and private investments; to facilitate and help investors meet environmental standards. It is responsible of smooth investment process, provision of guidance to mining investors, facilitate them and ensure that there is provided with incentives that allow them to sustainably continue to invest in Rwanda. The RDB has a key role in development of mining sector in Rwanda as its deals with investment promotion and mining is one the sectors that need foreign invest in the country.
I.5.4. Rwanda Environment Management Authority
Under supervision of the Ministry of Environment, from the Law n°63/2013 of 27/08/2013 determining the mission, organization and functioning of Rwanda Environment Management Authority (REMA), REMA reserves the legal mandate for national environmental protection, conservation, promotion and overall management, including advisory to the government on all matters pertinent to the environment and climate change. It is the authority in charge of supervising, monitoring and ensuring that issues relating to environment are integrated in all national development programs. Among others, it has the power of setting environment standards, environment inspection of mining projects and rehabilitation of exhausted mines and quarries.

The REMA comes into mining sector to monitor the implementation of environmental impact and protection and through its assessment.
I.5.5. Rwanda Mining AssociationA part from regulatory public institution of the mining sector it is also important to mention the contribution of the private sector in the well-being of the Mining sector in Rwanda.

The Rwanda Mining Association is an employer’s Professional Organization from the mining sector, which was created on 29/03/2012, and got its legal entity on the 27th August 2012. The Association is operating under the umbrella of the Private Sector Federation (PSF). The RMA is composed of big concessions belonging to the foreign investors represented by Rwanda Mining Investment Forum (RMIF), cooperatives represented by FECOMIRWA as well as Medium and individuals’ companies. The Rwanda Mining Association (RMA) has the following set objectives:
Promotion of minerals exploitation and Mining Business;
Representing its members among other Organs;
Promoting the Mining Industry and sharing information among all members about the market; and ensuring strict respect of Directives and Legislations regarding the exploitation and Mining business.

The RMA as a network that brings together all private actors and operators in mining industry has a key role in promoting rights relating to the mineral exploitation and trading. It helps also in experience sharing among key private interveners.

CHAPTER II: LEGAL ISSUES IN MINING TAXATION REGIME OF RWANDA
Despite the well-established legal and institutional framework to govern the mining sector in Rwanda, issues are still observed in the management of the sector operations including taxation regime. Therefore, as part of problem analysis of this research legal issues identified within mineral taxation regime include issues of traceability cost and due diligence fees as well as other multiple fees that are established in various laws and ministerial orders, to be charged to mineral traders.
This chapter analyses identified issues and its possible legal implications to mining sector Investment in Rwanda. Further, the chapter proposes effective measures to be taken in order to harnmonise the fiscal regime applicable to minerals exploitation and trading.
II.1. Double taxation due to seller and exporterThe legislator when drafting the Mining tax law has considered that any person that sells minerals is subject the mineral tax. The legislator then set the date of export as the due date for minerals tax payment. On the other hand, the Rwanda Revenue Authority published a handbook in year 2017 aimed at providing guidance to its stakeholders explaining who must register for Tax on Minerals.
According to Rwanda revenue authority handbook, any taxpayer who exports minerals must register for Tax on Minerals. Further, in the handbook RRA explains what happen when minerals are not exported. A taxpayer who sells minerals domestically within Rwanda does not have to pay Tax on Minerals, but must declare and pay Income Tax (CIT or PIT). It is obvious to wonder why the legislator when drafting the mineral tax law has opted to state that any person that sells minerals should pay a tax on that mineral when the law on income tax was already existing and applicable to all income earners.
An important court case (bellow detailed) constitute a good reference and fact finding that shows the contradiction among provisions which complicate the implementation by tax collectors. The case is about conflicting situation between the Rwanda revenue authority and a mining and minerals processing and trading company known as phoenix metal ltd as it is presented in the section below. When the law establishing the minerals tax was published in 2013, Rwanda Revenue started imposing and collecting that tax to all person-selling minerals with special focus on those exporting, despite the fact that some orders that were provided in that law for its implementation was not yet published.
This is what happened with Phoenix metals; the fact of the case was as such that RRA imposed the minerals tax on Phoenix metals exportations while Phoenix was enjoying the t6ax holday due to its investors title holding. Phoenix metals lodged a case arguing that as it was benefiting the exemption on the income tax under the investment policy, it could not be charged the mineral tax because this tax was deductible from the income tax.
The commercial court of Nyarugenge rejected the claim stating that they were no foundation of their claim. However, phoenix appealed at the higher level, and the High commercial court in its judgement R.com A 0320/14/HCC decided that Phoenix should be refunded of all the mineral tax collected by Rwanda Revenue Authority from September to December 2013. This because by the fact that the mineral tax was deductible from income tax, whoever was exempted from the income tax should automatically be exempted from the minerals tax as its considered as a charge over the income.

Whereas Phoenix was waiting for the judgement to be rendered, it continued to declare and pay the minerals tax, upon the release of the court decision, Phoenix Metal Ltd submitted on a case to Nyarugenge Commercial Court asking for reimbursement of tax paid within the period from December 2013 to November 2014. During the court healing RRA asked the court to consider the provisions under article 30 of the mineral tax law no 25/2005 of 04/12/2005 stating that any taxpayer who pretend to not being satisfied with the tax should perform an appeal to Commissioner General of RRA within 30 days for consideration.
The court basing on article 110 of the law no 15/2004 of 12/06/2004 regarding admitting the fact during the court healing, and referring to the fact that RRA was not denying that all the taxes paid by Phoenix metal was not due, decided that RRA should reimburse the tax collected during the claimed period. Rwanda Revenue has appealed against both cases to the Supreme Court raising different arguments including request of interpretation of the court judgement but all in vain.
Referring to this case it is obvious that legal issues reside on the level of implementation of the law nº 55/2013 of 02/08/2013 on minerals tax specifically where article 4 saying that any person selling minerals shall pay a tax on such minerals. Should RRA have considered that some of the taxpayer were exempted from the minerals tax this would have saved the state from unnecessary court proceedings.
II.2. Traceability and due diligence cost
The second issue relates to the exporters who are licensed to sell concentrate minerals to oversea smelters, processors and mineral traders have to apply for Tin supply Chain Initiative (iTSCi) membership.
In reaction to the international due diligence requirements and as a mean of facilitating access of Rwandan Minerals to the overseas market, the iTSCi traceability scheme was been integrated into Rwanda national mining regulatory system and has been jointly implemented by GMD and ITRI including its contracted partners across the whole 3T mining and trading sector since 2011.
iTSCi assists companies with due diligence and responsible sourcing of minerals from high risk arears. It is a joint industry membership program between the TIC and the international Tin Association (former ITRI) designed to assist companies with traceability, due diligence and audit requirements on purchases of minerals from high risk as recommended in the OECD due diligence guidelines and UN recommendations.
Prior to each export shipment of 3T concentrates exporters must apply for a certificate of origin from ministry of commerce and industry. Exporters, hence are required to assist management responsibility for due diligence processes, have a conflict minerals policy, and are subject to audits and risk assessment as well as to further controls by the downstream clients. The resulting costs for iTSCi implementation are significant; they are auto-financed through adjustable levies and fees collected at the exporter level for ITRI and GMD (currently changed to RMB), respectively. Applying the current levies and assuming typical export grades of 3T concentrates indicates that, on average, iTSCi costs represent ca. 2-4 % of the mineral export value at current average export prices without consideration of traditional internal – due diligence implementation costs of affected companies.
In addition, exporters are expected to apply for an International Conference on the Great Lakes Region (ICGRL) certificate to be issued by the ICGRL certification unit and Rwanda bureau of standard . . The first Rwanda ICGRL mineral export certificate was issued to Rutongo Mines Ltd on 5 November 2013. The event marked Rwanda as the first of the twelve member states of ICGLR to issue the mineral export certificate due to the fulfilment of all requirements by ICGLR standards.

The purpose of ICGLR mineral tracking and certification scheme is to provide for sustainable conflict-free mineral chains in and between member states of the International Conference on the Great Lakes Region. It further seeks to promote the mineral sector’s role in the peacefully economic and social development within the member states of the Great Lakes Region (GLR) by strengthening common regional standards for transparency working conditions, environmental performance and community consultation.

The Rwanda-ICGLR Mineral export certificate once given to the exporter it should accompany each exported shipment (container) of designated minerals that has been certified by the Mineral Export Certification Unit. The ICGLR certificate serves as the assurance to purchasers that a mineral shipment is conflict free through compliance of OECD DD Guidance standards, ICGLR standards, and National standards. Member states must examine each export of designated material including the ICGLR Independent Mineral Chain Auditor (IMCA) Report, the supporting documentation of chain of custody and inspection database showing the compliant information (green or yellow flagged) of mines of origin, data sharing with ICGLR secretariat (which should be continuously updated as the mining inspection goes on) before issuing the certificate.

These two traceability initiatives (iTSCi/ITRI & ICGLR/RCM) are being implemented on the same mining operators, sometimes this is seen as a duplication of initiatives; e.g. mine site, inspection/baseline studies & audit of mineral traders, etc; and they both have expensive implementation cost to paying tonnage-based levies for this two programs  (500 + 200 USD per ton). Different analyses have been on the side that cost of mines among exporters experiences excessive retentions at different levels. Fees and levies for mineral traceability and due diligence, payale to ITRI and GMD, are usually collected at the export level. Companies are often requested, though to pay or facilitate the transport for GMD tagging managers to perform their functions on the mine sites.
The Rwanda mining sector has to bear direct costs resulting from the conflict mineral due diligence framework. As aforementioned external due diligence costs comprise the current iTSCi levy paid to ITRI as well the commonly known RMB fees which is used to be called GMD that is paid to RMB, all levied at the export stage based on export volumes and essentially serving to auto finance the iTSCi scheme in Rwanda. Additional due diligence costs for companies in this regard include the iTSCi joining and membership fees, as well as logistical facilitation of RMB tagging managers to access remote mine sites.
Internal due diligence costs include, for example company management time to design and oversee the required internal due diligence procedures as well as potential supplier engagement/monitoring costs, both serving to follow the recommendations for companies as per the OECD due diligence guidance. Ultimately, introducing professional record keeping for smaller companies as a contribution to improve due diligence practice would further increase internal operational costs.
II.3. Multiple fees to mining business operators
There are several fees that are due to be paid by minerals traders and operators. This issue might be tackled from the harmonisation of Rwanda taxation regime related laws. The first conflicting provisions is the article 5 of the ministerial order no 002/2015 of 24/04/2015 determining criteria used in categorisation of mines and determining types of mines. Firstly, according to this article the amount of capital invested in artisanal mine must be at least seventy million Rwandan francs. This capital must be invested within the period not exceeding 5 years. Secondly, the article 9 states that the amount of capital invested in small-scale mine must be at least seven hundred million Rwandan francs. This capital must be invested within the period not exceeding five years. Thirdly, regarding the amount of capital to be invested in large-scale mine article 13 of the aforementioned order states that must be at least three billion five hundred million Rwandan francs.
Trying to be on the side of investors in mining sector, it is obvious to note that considering other due costs to be paid by new emerging investors in Rwanda the required amount in each of the above category of Investment exceed the capacity of many Rwandan operators in mine trading. The order affects the rate of investment in mining and development of the sector in general.
Ministerial order no 003/ 2015 of 24/04/2015 determining modalities for application, issuance and use of mineral and quarry license on its side has set numerous fee to be paid at different level in the application of mining license process. For instance among the requirements for application of exploration license the applicant must provide a receipt of a non-refundable application fee of one hundred thousand Rwandan francs (Rwf 100,000) deposited into the public treasury. Whereas applicant for a mining license must provide a receipt of a non-refundable fee of two hundred thousand (RWF200, 000).

Deposited into the public treasury and a reccipt of the deposit of financial guarantee of environmental protection in case the application is approved. On top of that article 11 determines the fee paid by an approved applicant; any applicant of mineral or quarry license whose application has been approved shall pay to the state treasury the following amount:
Two hundred thousand Rwandan francs in case it is an exploration license;
Three hundred thousand Rwandan francs in case of artisanl mining license;
Five hundred thousand rwanda francs in case of a small-scale mining license;
One million Rwandan francs for a large-scale mining licenses.

Then the same order provides for fees applicable to the licensed surface area in the following manner:
An exploration licensee shall pay two hundred and fifty Rwanda francs for each hectare;
An artisanal of small-scale mining licensee shall pay three hundred Rwandan francs annually for each hectare;
A large-scale mining licensee shall pay five hundred Rwandan francs annually for each hectare.

Any applicant for a renewal of a mineral and quarry license shall pay a non-refundable fee equall to the amount paid for the application fee of a mineral or quarry license. Any applicant for renewal of a mineral and quarry license shall also pay fees equal to such a fee paid by an approved license applicant and quarry license shall pay fees equal to such a fee paid by approved license applicant in case of approval of its renewal. The applicant for the transfer of a mineral and quarry license shall also pay fees equal to the fee paid by the person granted the same license in case authorised to transfer the license. Ministerial order n°001/minirena/2015 of 24/04/2015 determining modalities and requirements for the financial guarantee of environmental protection and its use in mining operations explains how the amount of financial guarantee shall be calculated: The guarantee shall be determined based on the general amount budgeted for the environmental protection plan or environmental impact assessment. The guarantee to be paid shall be calculated on the budget for environmental protection of five years, and shall be equal to twenty (20%) percent of the budget. The guarantee shall be five percent (5%) of the total planned investment budget if provisions of paragraph one and two of this article do not apply. The guarantee may be increased based on the inspection report on environmental protection. The new law in its article 47 states that the holder of a mineral or quarry licence pays taxes and other fees in accordance with the relevant laws, which means that all of the above mentioned fee, are still relevant. All of the Ministerial orders in which these amounts are specified, were based on the former law related to mining and quarry operations of 2014. This may also ended up causing another conflicting situation.
The issue lies in the final provisions of the new on mining and quarry operations, article 68 states that orders and regulations implementing law no 13/2014 of 20/05/2014 on mining and quarry operations continue to be in force in its provisions that are not substantially contrary to this law until they are repealed. On the other hand, article 70 stipulates that law no 13/2014 of 20/052014 on mining and quarry operations and all prior legal provisions contrary to this law are repealed. It is very difficult to reconcile these two provisions. When the law that an order was implementing is repealed. The implementing order should also be automatically repealed and it is not easy for anyone to know what is a substantial contradiction or non-substantial contradiction.
II.4. Regional context of mining tax regime
It is important for this research to look at the cases of other mining taxation regimes in the region where Rwanda is located. The following section includes the case of Uganda, DR Congo, Tanzania and Kenya. A comparative analysis on what applicable mineral tax regime in other countries as they do export minerals as well, it is therefore, with great importance to look at their experience.
For Rwanda, it will not only inform policy and law makers but also increase awareness of mineral operators on what constitute reality of other countries in the region regarding the mineral tax regime, and related incentives measures taken.
A summary of comparison analysis shall be developed at the end of all countries situation presentation.

II.4.1. Mining Taxation in DR CongoDemocratic Republic of Congo is one of global richest country in natural resource and particularly in minerals. Its situation has a serious impact on the mining industry in the Great Lakes Region. In Congo there are generally several duties as well , royalties and taxes that are payable by private parties on the concession. First, the tax and customs regime that applies to mining activities is exhaustive: The Congolese mining code of 2002 provides for all the taxes, charges, royalties and other fees owed to the treasury by a mining title holder in respect to this his or her mining activities, to the exclusion of any other form of taxation. However, this principle does not prevent the tax agencies from often claim additional taxes. When applicable the tax provision of the mining code refers to the general tax legislation. Second, the mining code provide a certain guarantee of stability: the existing tax, customs, exchange and other benefits applicable to the mining activities remain in effect for 10 years in favour of each concerned mining title holder in the vent that mining code is amended.
Congo enacted a new mining code early this year (2018), while the law improves environmental and social provisions; revisions to the fiscal regime, long considered relatively favourable to investors were the focus.   Nevertheless, mining companies and the government still seem to be in a deadlock over the changes to taxes and royalties, even after the law passed. While the industry has not protested the profit tax revisions, they have rung the alarm over two other changes   first, royalties are significantly increased: from 2% to 3.5 % for copper and cobalt, and up to 10% for any designated strategic substances. Second, the stabilisation clause is reduced from 10 to 5 years and the new code’s fiscal terms immediately apply to existing permit holders .

II.4.2. Mining Taxation in Uganda
The legal and policy framework regulating the mining sector in Uganda consists of the Constitution of the Republic of Uganda, the Mineral Policy (2001), the Mining Act (2003) and the Mining Regulations (2004). There are also other laws that have an impact on the mining sector, such as the National Environment Act, the Income Tax Act and the Land Act.

In Uganda an investment license is require for all foreign investor before any of their investment become operational , however for foreign investor to receive an investment license he must demonstrate a minimum planned investment of at least 100,000 USD whereas it is 50,000 USD for local inventors. The preparation of registration fee on different Minerals rights range between approximately 240-800 USD, annual Mineral rent varies depending on the size of the area, at rate of approximately 45 USD per Km2. With regards to royalties, they are payable depending on the mineral types, for precious metals, base metals and ores the rate is at 3% of the gross value whereas for precious stones the rate is at 5% of the gross value. Apart from the above, mining companies in Uganda are subject to Income tax that varies from 25to 45%, capital Gain Tax that applies on capital gains arising from the disposal of an interest in a license of 30%, VAT of 18% and withholding tax of 15 %.

It is important to note that despite the above tax charges Uganda has set very interesting incentives to mining operators:
The law provides for Allowable Deductions for a number of Expenditures and Losses in the computation of Income Tax, for instance, Interest on Loans, Bad Debts, Repairs, Depreciation, Initial Allowances, and Start-up Costs etc.,
Mining Companies are given special consideration through a Variable Rate Income Tax (VRIT). The rationale for this arrangement is to capture a competitive share of net cash flows for the government at different mine profitability levels while at the same time providing suitable tax relief for projects. A minimum of 25% and a maximum 45% VRIT have been put in place depending on the level of profitability.
There is the duty free importation of mining plant and equipment, with VAT deferment facilities.
All expenditure of a capital nature incurred in searching for, discovering, testing and winning access to mineral deposits is tax deductible. An initial allowance of 50% is available for plant and machinery brought into use in major towns and 75% in other parts of the country.

Royalties are tax deductible.

Indefinite carry forward of tax losses.
Importation of specialized equipment for exploration and development of minerals is exempt from duty.
Importation of capital plant, machinery and equipment exempt from import duty under the EACMA (East Africa Customs Management Act) is automatically exempt from VAT. Other items are subject to VAT, but payment may be deferred. It is clear that although the mining tax regime in Uganda has various components, the government of Uganda has tried to set tax incentives that may easily attracts investors.

II.4.3. Mining taxation in Kenya
In Kenya resident and non-resident corporations are liable to pay corporation tax on all income generated within the country. Corporation tax rate is currently at 30% where a branch of a foreign company is taxed at 37.5%. A reduced rate of tax applies if a company has been recently listed on the Kenya capital gains are generally not taxable in Kenya. However, following the finance act of 2012 the government introduced a withholding tax on transfer of shares or property in the mining sector. A sale of mining company will now attract a withholding tax of up to 20% (locals involved in such a transaction will be required to pay a reduced rate of 10%. It is hoped that the passing of the draft bill would provide the clarity and certainty needed to develop the Kenyan mining industry. Kenya, as with its East African neighbours, is showing signs of a mining industry with enormous potential. The challenge for the Government is to ensure that the legal and regulatory regime strikes the correct balance between optimizing its national interest whilst encouraging large-scale foreign investments.
II.4.4. Mining taxation in Tanzania
The current fiscal regime applicable to the mining sector in Tanzania is set out in the Mining Act 2010, the Income Tax Act of 2004 and indirect taxation laws. The basic income components from mining activities include; royalties, license fees, income taxes (e.g. PAYE, corporate tax, special Skilled Levy, withholding taxes) and VAT. The Tanzania Revenue Authority administers taxes while other fees, such as royalties and license fees, are administered through the Ministry of Energy, Minerals, and local government authorities.
Royalties are paid by the mining operator or prospector on minerals exploited. Royalties manifest in a wide variety of forms, yet they are commonly based on the quantity and value of minerals produced and sometimes based on profitability. Figure 3 shows actual provisional royalties paid by the major gold mines to the government from 2001 to 2010. Actual royalties have increased from $1.6 million in 2001 to $40.5 million in 2010, mainly due to the increase of mineral prices.
The Section 145 of the Income Tax Act (2004) governs taxes on mining companies. Mining tax revenue contributes an average of 2.2% of total tax revenue collected by the Tanzania Revenue Authority. Despite the small share, tax revenue from the sector has increased from $2.1 million in 1999 to $71.6 million in 2010 The increase is attributed to the growth in mineral production resulting from an expansion of investments in the sector as well as the increase in global prices for minerals, especially gold. Income taxes collected from the mining sector include Corporate Income Tax (CIT), Pay as You Earn (PAYE), Skills Development Levy, Withholding Taxes and Rental Taxes.

From the above presented situation of the regional context, it is important to note that in Congo, the mining rate is calculated on the value of sales made less transport costs and fewer assays, insurance and marketing costs, whereas, in Rwanda mineral taxes are calculated on gross value. It is obvious that Rwanda mineral traders undergo heavy royalties. It is the same case with the Ugandan taxation regime, as far as royalties are concerned as previously mentioned their rates are still competitive compared to Rwanda. In general, the mining industry in the great lakes region is promising but each country faces its own regulatory challenges.
GENERAL CONCLUSION
It is quite important to bear in mind that Rwanda’ mining sector despite having existed for about a century now, is still at its early development stage, it is consolidating itself, both in terms of productivity, governance and fiscal/economic contribution to the national economy.
The decision to introduce royalty tax in Rwanda was based on the fact that taxes collected from mining sector were very little considering the size of the industry. It was also based on the research on how Rwanda’s economy could grow if its resources are adequately tapped. The royalty tax rates on mines fixed at 4% of the norm value of basic metals and other minerals, 6% of the norm value of gold and precious metals, and 6 percent of the gross value of diamonds and other precious stones. However, investors, argue it’s an extra burden since they are already paying several other fees as demonstrated in chapter two of this paper. The policy and lawmakers should always consider the existing operational and environment cost prior enacting new tax legislations.

Too high fees for exploration licenses are counterproductive and unjustifiable mostly to undeveloped exploration. There is a considerable need to minimize and harmonize mining taxes and other payable fee by minerals traders which would help in developing a sustastainable mining industry that is interesting
The researcher recommends the harmonisation of different pieces of legislation relative to the mining industry especially with regards to various charges that are undergone by the minerals traders. As it is obvious that there is need to harmonize all the operational cost that are scatted in different laws and consideration of all the expenses that minerals traders incur.

Another area of concern for exporters is in the duplication of effort in due diligence and traceability requirements. The current initiatives (iTSCi/ITRI & ICGLR) are being implemented on the same mining operators. Costs are supposed to be borne by the exporter to be audited. Collection of the ITRI levy already contributes to regular third party audits. Both audit systems essentially evaluate the same audit standard, that is, the OECD Due Diligence Guidance.

There is a need for harmonization technical operations of iTSCi and ICGLR to reduce the costs and avoid audit fatigue that mining operators in Rwanda are subjected to. The researcher recommends that The Rwandan legislator should consider the fact that Rwanda mining sector face particular challenges that are related to the regional location of Rwanda, as Rwanda is located in the area, which is considered in armed conflict by the international community, which makes the Minerals from Rwanda susceptible to various verification and control. This should be given special attention when preparing laws that would result into payment of other additional fee by mining operators. Briefly, it is important to note the main recommendations of the researcher in conclusion of this research:
To harmonize the provisions under article 4 and article 9 in order to bridge the gap between the tax due at the selling of minerals and the tax due at the date of minerals exportation;
To harmonize all the operational cost that are scatted in different laws;
To reconcile the technical operation of iTSCI and ICGLR scheme.
Since Taxation is cardinal in financing development undertaking. Revenue raised through taxation is more sustainable than reliance on borrowing. However, in order to raise sufficient revenue, there is need to have an effective tax system which should be developed by taking into account the basic taxation principles such as equity, efficiency, simplicity, fairness, competitiveness and predictability. It would be wise to draft mining taxation laws that respect the above principle to facilitate the competitiveness of minerals from Rwanda on the global market and the sustainable growth of the Rwandan Mining Sector.

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