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Part C: Fiscal Terms - 36. Fiscal Terms - 36.3 Taxes | 36.3(d). Property Tax

Property taxes are a levy on property that the owner is required to pay, where the property may be land, improvements to land (such as buildings), personal property (movable man-made objects) or intangible property. It may also include stamp duties or other transfer taxes, which are generally charges imposed on the legal transfer of property from one person to another. These taxes may be collected at the national or subnational level. It is also possible for more than one jurisdiction to tax the same property.

In theory, these taxes should also be standard across all sectors of the economy. All references in the mining legislation should reference the general tax legislation.

In practice, in many countries mining investments are by far the largest capital investments in their regions, and because property taxes tend to be considered non-tax revenue and collected (or even spent) at a different level than other taxes, they become the focus of attention by those agencies that directly collect or benefit from them.

A strong, predictable fiscal regime for the mining sector should focus on the major fiscal tools (royalties, income tax, resource rent tax), and try to minimize special emphasis on other fiscal obligations, aligning them to the general legislation. This will simplify tax administration, avoid unnecessarily discriminatory treatment of the mining sector, and remove such taxes from the scope of negotiation, during which governments may be negotiated downward.

36.3(d). Example 1:

Article [_] Taxation

(1) Unless otherwise provided by this Constitution or the laws of [Country]:

(a) All property is taxable and shall be assessed at the same percentage of fair market value. When a value standard other than fair market value is prescribed by this [Code][Act][Law] or by statute authorized by this [Code][Act][Law], the same percentage shall be applied to determine the assessed value. The value to which the percentage is applied, whether it be the fair market value or not, shall be known for property tax purposes as the full value.

(b) All property so assessed shall be taxed in proportion to its full value.

Article [_] Tax Limitation

(1) The maximum amount of any ad valorem tax on real property shall not exceed One percent (1%) of the full cash value of such property. The one percent (1%) tax to be collected by the counties and apportioned according to law to the districts within the counties.

(2) The "full cash value" means the county assessor's valuation of real property as shown on the 1975-76 tax bill under "full cash value" or, hereafter, the appraised value of real property when purchased, newly constructed, or a change in ownership has occurred after the 1975 assessment. All real property not already assessed up to the 1975-76 full cash value may be reassessed to reflect that valuation.

(3) “Real estate” or “real property” includes:

(a) The possession of, claim to, ownership of, or right to the possession of land.

(b) All mines, minerals, and quarries in the land, all standing timber whether or not belonging to the owner of the land, and all rights and privileges appertaining thereto.

(c) Improvements.

Annotation

Drawn from California’s Constitution (as amended in 1974), this provision provides the state the right to impose property taxes and also sets a limit on the property tax rate and defines the property tax base.

California’s revenue and taxation code then specifically defines “real property” to include “mines, minerals and quarries in the land.”

Rule 469 of California’s Board of Equalization Property Tax Rules (not reproduced here) then provides detailed instructions to assessors on valuation of mines.

This is an example of taxation on the value of property, where the property is the mine. However, the complications with valuing mines in all phases of development (as Rule 469 provides for) may make this option impractical for low capacity countries.

36.3(d). Example 2:

Article [_] Assessment of duty

(1) The [Regulating Authority] shall assess the duties payable on an instrument required to be stamped under this [Code][Act][Law].

(2) Conveyance or transfer on sale of a property-

(a) Where the amount of the value of consideration for the sale does not exceed 100,000,000 -- 0.25%

(b) Where the amount of the value of consideration exceeds if, 100,000,000 but does not exceed if,500,000,000.00 -- 0.5%

(c) Where the amount of the value of consideration exceeds if, 500,000,000 -- 1%

(3) Lease -

(a) For a definite term up to three years:

(i) Where the rent for such term does not exceed ¢500,000.00 -- 0.5%

(ii) Where the rent for such term exceeds ¢500,000.00 -- 1 %

(b) For any other definite term: Where the consideration, or a part of the consideration, moving either to the lessor or to any other person, consists of money, stock or security:

(c) In respect of such consideration-the same duty as a conveyance on sale for the same consideration, where the consideration or any part of the consideration is rent then in respect of such rent:

If the term is definite and does not exceed 5 years -- 0.5%

If the term is definite and does not exceed 21 years -- 0.5%

If the term exceeds 50 years -- 1 %

(d) Lease of any other kind not described in this Schedule -- 1%

(4) Natural resources leases or licences.

In addition to the duty otherwise payable under this Act on a concession or a mining lease granted under an enactment:

Mineral lease -- 250,000.00

Offshore lease -- 250,000.00

Timber lease -- 125,000.00

Timber licence -- 50,000.00

Prospecting licence -- 25,000.00

Exclusive prospecting licence -- 50,000.00

Quarrying licence -- 25,000.00

Diamond digging licence -- 25,000.00

Leases under section 12(2) (c) of the Administration of Lands Act, 1962 (Act 123) -- 5,000.00

(5) Power of attorney or other instrument in that nature -- 20,000.00

Annotation

Drawn from Ghana’s Stamp Duty Act (2005), this provision imposes a tax on documents created for the purposes of recording a transaction. Stamp duties are payable on conveyance or transfer on sale of property or on leases as a percentage of the consideration for the conveyance or lease.

In addition, stamp duties are also payable in fixed amounts for documents granting a concession or mining lease.