Just over a year since its implementation and adoption, the Revised Mining Code in DRC has brought with it positive changes to corporate social responsibility, environmental protection, transparency and ensured better controlled legal and fiscal frameworks.
A bone of contention for the mining sector remains the new tax measures that were introduced, says PwC assurance and advisory partner for Francophone Africa JEAN JACQUES MUKULA.
“Some measures, such as capital gains tax, still remain unclear, with mining players expecting clarifications or additional guidance from the DRC authorities, Mukula notes.
As a result, PwC – who has been present in the Democratic Republic of Congo (DRC) for nearly 45 years – has been assisting clients in analysing the tax implications of the Revised Mining Code on their specific operations.
Moreover, a decree by the government just after the implementation of the Mining Code that declared cobalt and coltan strategic minerals – nearly tripling the royalty rate miners will pay to 10% – has been met with opposition by existing DRC mining companies.
They believed they were protected from the royalty by the grandfathering clause under the 2002 code, which would have protected them against fiscal modifications until 2028.
Until now, it seems that none of the mining companies that have lobbied against the implementation of the Revised Mining Code have decided to challenge the code through international arbitration.
However, for new investors entering the DRC, there is no way around the new royalty rates – which are in place as a means to ensure that the government may enjoy the benefits of cobalt and coltan’s global importance.
Mukula believes that to ensure a sustainable future of growth for the DRC, the government has to reassure mining companies on its ability to create a secure and stable environment; while mining companies, from their side, have to act as transparent and compliant players.
“Indeed, the main challenges the sector will face going forward are environmental and social responsibilities, transparency, compliance and managing the lack of energy,” he notes.
While the peaceful handover of power to newly appointed DRC President Felix Tshisekedi has reassured major investors, only time will tell the effect that the application of the Revised Mining Code will have on mining investment in future.
The importance of DRC Mining Week: As a leader in audit, accounting, advisory and tax services, PwC believes it is important to take part in the DRC Mining Week – an important event for DRC mining sector – because it has a duty to assist companies in their legal obligations essential to carry out their business activities in the country.