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Part B: Mineral Rights - Part B-6: Beneficiation - Processing, Trade & Transport - 35. Beneficiation – Processing, Trade and Transport | 35.13 Incentives for Processing, Trade and Transportation of Development Minerals

Incentives for processing, trade and transportation of development minerals are advantages conferred on licensees for purposes which may include promotion of one or more of the following policy goals:

(a) formalization of informal economic activities (e.g., declaration and/or reporting of economic activity, business registration and payment of taxes);

(b) local investment in the subsector;

(c) increasing and/or stabilizing local employment in the subsector;

(d) improvement of practices in the subsector; or

(e) other policy goals.

Incentives frequently take the form of tax relief (i.e., tax exemptions or holidays, rate reductions, allowable deductions, etc.). However, they may take other forms such as :

    (a)priority for the award of certain government contracts;

    (b)protection from competition;

    (c)preferential access to credit, or preferential terms for credit;

    (d)government subsidies; or

    (e)the provision of services or material and equipment to licensees for free or at discounted prices.

The important thing about incentives is that they should be carefully designed so that they are only provided to the target population or activity. They should be easy to administer and not subject the beneficiaries to onerous paperwork or procedures in order to benefit from them. They should be part of a comprehensive policy with clear objectives and a realistic timeline. And they should be evaluated as to their effectiveness and modified or eliminated if they are not effective in achieving the motivating policy goals or if they produce significant unintended negative consequences. Moreover, enforcement and policing of incentives should be implemented in such a way so as to prevent abuse.