The foreign exchange problems in Sierra Leone will soon be limited after sale of the country’s largest mining company Sierra Rutile limited.
A 30% Capital Gains Tax (CGT) approximated at $50m (50 million US dollars) will be paid by the acquiring company ILUKA limited according to Sierra Leone’s Finance Act of 2013.
The Act demands CGT to be paid within 30 days on the sale of a non-inventory asset that is purchased at a cost amount that is lower than the amount realized on the sale.
The CGT added to the company’s debts and sale price of $375 million will total almost $500 million (five hundred million US dollars).
According to Bloomberg, the government is discussing Iluka’s proposed takeover but is yet to take a formal position.
The Minister of State for Finance told Bloomberg in a telephone interview that there is no adverse reaction from government so long there is a full compliance with the country’s laws and paying of taxes due on transactions including CGT.
According to information on the National Revenue Authority (NRA) website, “30% capital gains tax is imposed on chargeable person from the disposal of a chargeable asset, and capital gain is defined as the excess of the consideration received or receivable (whether in cash, kind or by any other means) over the cost based at the time of the realization.”
Government of Sierra Leone recently received $30m (Thirty million US dollars) from Orange for the acquisition of Airtel mobile company. Sierra Rutile limited is expectedly worth more than Airtel Sierra Leone and therefore expected to yield more CGT than Airtel.
The Leone currency recently plummeted after mineral exports which were the major source of foreign exchange decreased. The recent CGT payment will cushion foreign exchange problems. ILUKA is a mineral sands company operating in Australia.