DEMOCRATIC Republic of Congo’s government has decided to suspend the value-added tax exemption on mining companies’ imports in an effort to bolster state revenues, the budget minister said in a letter cited by Reuters.
The letter by Budget Minister Jean-Baudouin Mayo to the finance minister is dated July 31 and was seen by Reuters on Tuesday.
The DRC’s economy is under significant strain from the Covid-19 pandemic, with foreign currency reserves shrinking and mining companies taking longer to repatriate the 60% of mineral sales, said Reuters in a report on July 7.
Economic distress forms the background of efforts by gold mining firms Barrick Gold and AngloGold Ashanti to extract some $500m in joint venture monies from the DRC where they operate the Kibali mine.
In terms of an agreement with the DRC, 60% of revenue earned from the Kibali mine, which Barrick controls in joint venture with AngloGold Ashanti, has to be repatriated to the central African country for economic development purposes, internal dividends, and to pay creditors. The balance of the revenue is paid into a joint venture offshore account to pay creditors and to meet other obligations.
The joint venture partners are, however, allowed to extract any excess revenue from the DRC. However, this requires the approval of the DRC authorities. As that approval has been slow coming, the monies have built up over time and were estimated to be $500m at the close of the last quarter.
Barrick Gold said in July that it expected to paid $500m in joint venture revenue from the “very soon”, according to Reuters which cited the Canadian firm’s CEO, Mark Bristow.