Section 9 (MPRA) – Rollover relief for disposals involving going concerns

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9   Rollover relief for disposals involving going concerns

 

(1)     For purposes of this Act a disposal of a mineral resource by an extractor that forms part of the disposal of a going concern, or of a part of a going concern which is capable of separate operation, by that extractor to any other extractor is deemed not to be a disposal.

 

(1A)   For purposes of this Act a disposal of a mineral resource by an extractor to any other extractor is deemed not to be a disposal, if—

 

(a)     the mineral resource is disposed of to another extractor in terms of—

 

(i)      an asset-for-share transaction mentioned in section 42 of the Income Tax Act;

 

(ii)     an amalgamation transaction mentioned in section 44 of the Income Tax Act;

 

(iii)    an intra-group transaction mentioned in section 45 of the Income Tax Act;

 

(iv)    a liquidation distribution mentioned in section 47 of the Income Tax Act; or

 

(v)     any transaction which would have constituted a transaction or distribution mentioned in subparagraphs (i) to (iv) regardless of whether that extractor acquired that mineral resource as a capital asset or as trading stock; and

 

(b)     the extractor to whom the mineral resource is disposed of, immediately after a transaction contemplated in paragraph (a)(i), (ii), (iii), (iv) or (v), qualifies for registration in terms of section 2(1)(a) of the Administration Act.

[Subsection (1A) inserted by section 100(1) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

 

(2)     For purposes of this Act an extractor that acquires a mineral resource in terms of a disposal mentioned in subsection (1) is deemed to be the extractor that won or recovered the mineral resource.

Section 8A (MPRA) – Rollover relief for transfers between extractors

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8A     Rollover relief for transfers between extractors

 

(1)     An extractor that transfers a mineral resource to another extractor is exempt from the royalty in respect of the transfer of that mineral resource if—

 

(a)     the mineral resource is transferred between extractors that are registered in terms of the Administration Act; and;

 

(b)     both extractors agree in writing that this section applies to that transfer.

 

(2)     An extractor to whom a mineral resource is transferred under subsection (1) must be treated as the person that wins or recovers the mineral resource.

 

(3)     This section does not apply to a transfer of a mineral resource from an extractor that is registered in terms of section 2(1)(c) of the Administration Act.

[Section 8A inserted by section 135(1) of Act 7 of 2010 and amended by section 150(1) of Act 24 of 2011 deemed effective on 1 March, 2010 and applies in respect of a mineral resource transferred on or after that date]

Section 8 (MPRA) – Exemption for sampling

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8   Exemption for sampling


An extractor is exempt from the royalty imposed in respect of mineral resources won or recovered by the extractor for purposes of testing, identification, analysis and sampling mentioned in section 20 of the Mineral and Petroleum Resources Development Act pursuant to a prospecting right or an exploration right as defined in section 1 of that Act if the gross sales in respect of those mineral resources do not exceed R100 000 during a year of assessment.

[Section 8 substituted by section 97 of Act 23 of 2018]

Section 7 (MPRA) – Small business exemption

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7   Small business exemption


(1)     An extractor is exempt from the royalty in respect of a year of assessment if—


(a)     gross sales of that extractor in respect of all mineral resources transferred does not exceed R10 million during that year;


(b)     the royalty in respect of all mineral resources transferred that would be imposed on the extractor for that year does not exceed R100 000; and

[Paragraph (b) amended by section 186(1)(a) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of a mineral resource transferred on or after that date]

(c)     the extractor is a resident as defined in section 1 of the Income Tax Act throughout that year.

[Paragraph (c) amended by section 186(1)(b) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of a mineral resource transferred on or after that date]

(d)      . . . . . .

[Paragraph (d) deleted by section 186(1)(c) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of a mineral resource transferred on or after that date]

(2)     An extractor is not exempt from the royalty as mentioned in subsection (1) if—


(a)     the extractor at any time during that year holds the right to participate (directly or indirectly) in more than 50 per cent of the share capital, share premium, current or accumulated profits or reserves of, or is entitled to exercise more than 50 per cent of the voting rights in, any other extractor;


(b)     any other extractor at any time during that year holds the right to participate (directly or indirectly) in more than 50 per cent of the current or accumulated profits of the extractor;


(c)     any other person at any time during that year holds the right to participate (directly or indirectly) in more than 50 per cent of the profits of the extractor and more than 50 per cent of the current or accumulated profits of any other extractor; or


(d)     the extractor is a registered person mentioned in section 4 of the Administration Act.

Section 6A (MPRA) – Application of Schedule 2

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6A       Application of Schedule 2

 

(1)       If any unrefined mineral resource-

 

(a)     is transferred below the condition specified in Schedule 2 for that mineral resource, the mineral resource must be treated as if that mineral resource had been transferred in the condition specified for that mineral resource; or

[Paragraph  (a) substituted by section 185(1)(a) of Act 31 of 2013 and by section 55(a) of Act 42 of 2024]

 

(b)     is transferred in a condition beyond the condition specified in Schedule 2 for that mineral resource, the mineral resource must be treated as having been transferred in the higher of the condition specified for that mineral resource or the condition in which that mineral resource was extracted.

[Paragraph (b) substituted by section 185(1)(a) of Act 31 of 2013 and by section 96(a) of Act 23 of 2018]

 

(1A)  If any unrefined mineral resource with a range is transferred—

 

(a)     in a condition below the minimum of the range of conditions specified in Schedule 2 for that mineral resource, the mineral resource must be treated as if that mineral resource had been transferred at the minimum of the range of conditions specified for that mineral resource;

[Paragraph (a) substituted by section 96(b) of Act 23 of 2018 and by section 55(b) of Act 42 of 2024]

 

(b)     at or within the range of conditions specified in Schedule 2, the mineral resource must be treated as having been transferred at that condition; or

 

(c)     in a condition above the maximum range of conditions specified in Schedule 2, the mineral resource must be treated as having been transferred at the maximum of the range of conditions specified for that mineral resource.

[Subsection (1A) inserted by section 185(1)(b) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of any mineral resources transferred on or after that date. Paragraph (c) substituted by section 96(c) of Act 23 of 2018]

 

(2)      If—

 

(a)     a concentrate mainly consists of a mineral resource listed in Schedule 2; and

 

(b)     the price of the concentrate at disposal thereof is determined solely with reference to the mineral resource listed in Schedule 2, the specified condition for the other minerals in the concentrate must not be taken into account for the purposes of the application of that Schedule.

[Section 6A inserted by section 134(1) of Act 7 of 2010 deemed effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

Section 6 (MPRA) – Gross sales

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6        Gross sales

 

(1)     Gross sales in respect of a refined mineral resource transferred—

 

(a)     as mentioned in paragraph (a) of the definition of “transfer” in section 1 in the condition specified for that mineral resource in Schedule 1 is the amount received or accrued during the year of assessment in respect of the transfer of that mineral resource;

 

(b)     as mentioned in paragraph (a) of the definition of “transfer” in section 1 in a condition other than that specified for that mineral resource in Schedule 1 is the amount that would have been received or accrued during the year of assessment in respect of the transfer of that mineral resource had that mineral resource been transferred in the condition specified in Schedule 1 for that mineral resource in terms of a transaction entered into at arm’s length; and

 

(c)     as mentioned in paragraph (c) of the definition of “transfer” in section 1 is the amount that would have been received or accrued during the year of assessment in respect of the transfer of that mineral resource had that mineral resource been transferred in the condition specified in Schedule 1 for that mineral resource in terms of a transaction entered into at arm’s length.

[Paragraph (c) substituted by section 95(1)(a) of Act 23 of 2018 effective on 1 January, 2019]

 

(2)     Gross sales in respect of an unrefined mineral resource transferred—

 

(a)     as mentioned in paragraph (a) of the definition of “transfer” in section 1 in the condition specified in Schedule 2 for that mineral resource is the amount received or accrued during the year of assessment in respect of the transfer of that mineral resource;

 

(b)     as mentioned in paragraph (a) of the definition of “transfer” in section 1 in a condition other than that specified for that mineral resource in Schedule 2 is the amount that would have been received or accrued during the year of assessment in respect of the transfer of that mineral resource had that mineral resource been transferred in the condition specified in Schedule 2 for that mineral resource in terms of a transaction entered into at arm’s length; and

 

(c)     as mentioned in paragraph (c) of the definition of “transfer” in section 1 is the amount that would have been received or accrued during the year of assessment in respect of the transfer of that mineral resource had that mineral resource been transferred in the condition specified in Schedule 2 for that mineral resource in terms of a transaction entered into at arm’s length.

[Paragraph (c) substituted by section 95(1)(b) of Act 23 of 2018 effective on 1 January, 2019]

 

(3)

 

(a)     For purposes of subsection (1), gross sales is determined after deducting any expenditure actually incurred in respect of, insurance and handling of a refined mineral resource after that mineral resource was refined to the condition specified in Schedule 1 for that mineral resource or any amount received or accrued to effect the disposal of that mineral resource.

[Paragraph (a) substituted by section 95(1)(c) of Act 23 of 2018 effective on 1 January, 2019]

 

(b)     For purposes of subsection (2), gross sales is determined after deducting any expenditure actually incurred in respect of transport, insurance and handling of an unrefined mineral resource after that mineral resource was brought to the condition specified in Schedule 2 for that mineral resource or any expenditure actually incurred in respect of transport, insurance and handling to effect the disposal of that mineral resource.

[Subsection (3) substituted by section 99(1) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date. Paragraph (b) substituted by section 95(1)(c) of Act 23 of 2018 effective on 1 January, 2019]

 

(4)

 

(a)     If no amount can be quantified in respect of a refined mineral resource transferred as mentioned in subsection (1)(a), gross sales in respect of that transfer is the amount that would have been received or accrued during the year of assessment in respect of that transfer had that mineral resource been transferred in the condition specified in Schedule 1 for that mineral resource in terms of a transaction entered into at arm’s length.

 

(b)     If no amount can be quantified in respect of an unrefined mineral resource transferred as mentioned in subsection (2)(a), gross sales in respect of that transfer is the amount that would have been received or accrued during the year of assessment in respect of that transfer had that mineral resource been transferred in the condition specified in Schedule 2 for that mineral resource in terms of a transaction entered into at arm’s length.

 

(5)     The amount of gross sales in respect of the transfer of any mineral resource must be adjusted if the total amount received is—

 

(a)     more than the amount accrued, by including the difference between those amounts in the gross sales; or

 

(b)     less than the amount accrued, by subtracting the difference between those amounts when determining the gross sales.

[Subsection (5) added by section 133(1) of Act 7 of 2010 deemed effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

Section 5 (MPRA) – Earnings before interest and taxes

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5       Earnings before interest and taxes

(1)     For purposes of the formula in section 4(1) and (1A), “earnings before interest and taxes” in respect of a year of assessment means the aggregate of-

(a)     the gross sales of the extractor during that year in respect of refined mineral resources; and

(b)     so much of the amount allowed to be deducted from income in terms of the Income Tax Act (whether in that year or a previous year of assessment) in respect of the use of assets, or expenditure incurred, in respect of mineral resources transferred on or after 1 March 2010 to win, recover and develop those mineral resources to the condition specified in Schedule 1, as is included in the income of the extractor during that year of assessment—

(i)       as a recoupment in terms of any provision of that Act; or

(ii)      in terms of paragraph (j) of the definition of “gross income” in section 1 of that Act,

[Paragraph (b) substituted by section 98(1)(a) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

less any amount which in terms of that Act—

(i)      is deductible from the income of the extractor during any year of assessment in respect of assets used or expenditure incurred to win, recover and develop those refined mineral resources to the condition specified in Schedule 1 for those mineral resources; or

(ii)     would have been deductible from the income of the extractor during any year of assessment in respect of assets used or expenditure incurred to win, recover and develop those refined mineral resources had those mineral resources been developed to the condition specified in Schedule 1 for those mineral resources.

[Subsection (1) amended by section 98(1)(b) of Act 17 of 2009, substituted by section 132(1)(a) of Act 7 of 2010 and amended by section 56(1) of Act 17 of 2023 deemed effective on 1 January, 2024 and applicable in respect of years of assessment commencing on or after that date]

(2)     For purposes of the formula in section 4(2), “earnings before interest and taxes” in respect of a year of assessment means the aggregate of—

(a)     the gross sales of the extractor during that year in respect of unrefined mineral resources; and

(b)     so much of the amount allowed to be deducted from income in terms of the Income Tax Act (whether in that year or a previous year of assessment) in respect of the use of assets, or expenditure incurred, in respect of mineral resources transferred on or after 1 March 2010 to win, recover and develop those mineral resources to the condition specified in Schedule 2, as is included in the income of the extractor during that year of assessment—

(i)       as a recoupment in terms of any provision of that Act; or

(ii)      in terms of paragraph (j) of the definition of “gross income” in section 1 of that Act,

[Paragraph (b) substituted by section 98(1)(c) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

less any amount which in terms of that Act—

(i)      is deductible from the income of the extractor during any year of assessment in respect of assets used or expenditure incurred to win, recover and develop those unrefined mineral resources to the condition specified in Schedule 2 for those mineral resources; or

(ii)     would have been deductible from the income of the extractor during any year of assessment in respect of assets used or expenditure incurred to win, recover and develop those unrefined mineral resources had those mineral resources been developed to the condition specified in Schedule 2 for those mineral resources.

[Subsection (2) amended by section 98(1)(d) of Act 17 of 2009 and by section 132(1)(b) of Act 7 of 2010 deemed effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

(3)     For purposes of subsections (1) and (2), “earnings before interest and taxes” is determined without regard to—

(a)     any deduction in respect of a financial instrument as defined in section 1 of the Income Tax Act (other than an instrument that is an option contract, forward contract or other instrument the value of which is derived directly or indirectly with reference to mineral resources);

(b)     any deduction allowed in terms of section 11(a) of the Income Tax Act in respect of the royalty;

(c)             

(i)      in the case of mineral resources refined to the condition specified in Schedule 1 for those mineral resources, any deduction for expenditure incurred in respect of transport, insurance and handling of those refined mineral resources after those mineral resources were refined to that condition or any expenditure incurred in respect of transport, insurance and handling to effect the disposal of that mineral resource; or

(ii)     in the case of mineral resources brought to the condition specified in Schedule 2 for those mineral resources, any deduction for expenditure incurred in respect of transport, insurance and handling of those unrefined mineral resources after those mineral resources were brought to that condition or any expenditure incurred in respect of transport, insurance and handling to effect the disposal of that mineral resource;

[Paragraph (c) substituted by section 98(1)(e) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

(d)     any balance of assessed loss mentioned in section 20(1)(a) of the Income Tax Act, unless the balance of assessed loss arises in respect of capital expenditure taken into account for purposes of paragraph 5(1) of the Tenth Schedule of the Income Tax Act;

(e)     any deduction allowed in terms of section 24I of the Income Tax Act other than a deduction in respect of the adjustment referred to in section 6(5); or

[Paragraph (e) substituted by section 132(1)(c) of Act 7 of 2010 and amended by section 184(1)(a) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of a mineral resource transferred on or after that date]

(f)      any determination in respect of an impermissible tax avoidance arrangement contemplated in Part IIA of the Income Tax Act.

[Paragraph (f) amended by section 184(1)(b) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of a mineral resource transferred on or after that date]

(g)       . . . . . .

[Paragraph (g) deleted by section 184(1)(c) of Act 31 of 2013 effective on 1 March, 2014 and applicable in respect of a mineral resource transferred on or after that date]

(4)

(a)     For purposes of determining “earnings before interest and taxes” in the case of a composite of refined mineral resources and unrefined mineral resources, the refined and unrefined proportions of the composite mineral resource must be determined in accordance with a method of reasonable apportionment that is consistently applied.

(b)     For purposes of determining “earnings before interest and taxes”, if the value of the refined proportion of a composite mineral resource does not exceed 10 per cent of the total value of that composite resource, that composite mineral resource may be treated solely as an unrefined mineral resource, and if the value of the unrefined proportion of a composite mineral resource does not exceed 10 per cent of the total value of that composite mineral resource, that composite mineral resource may be treated solely as a refined mineral resource.

[Paragraph (b) substituted by section 98(1)(f) of Act 17 of 2009 effective on 1 March, 2010 and applicable in respect of a mineral resource transferred on or after that date]

(5)     For purposes of this section, if “earnings before interest and taxes” is a negative amount that amount is deemed to be nil.

Section 4 (MPRA) – Royalty formulae

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4       Royalty formulae

(1)     The percentage mentioned in section 3(1) is-

0.5 + [earnings before interest and taxes/(gross sales in respect of refined mineral resources x 12.5)] x 100.

(1A)   The percentage mentioned in section 3(1A) is-

2 + [earnings before interest and taxes/(gross sales in respect of refined mineral resources × 12.5)] × 100.

[Subsection (1A) inserted section 55(1)(a) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of years of assessment commencing on or after that date]

(2)     The percentage mentioned in section 3(2) is-

0.5 + [earnings before interest and taxes/(gross sales in respect of unrefined mineral resources x 9)] x 100.

(3)

(a)     The percentage determined in terms of subsections (1) and (1A) must not exceed 5 per cent.

[Paragraph (a) substituted section 55(1)(b) of Act 17 of 2023 with effect from 1 January, 2024 and applicable in respect of years of assessment commencing on or after that date]

(b)     The percentage determined in terms of subsection (2) must not exceed 7 per cent.

Section 3 (MPRA) – Determination of royalty

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3.       Determination of royalty

(1)     The royalty mentioned in section 2 in respect of the transfer of a refined mineral resource, other than oil and gas, is determined by multiplying the gross sales of the extractor in respect of that mineral resource during the year of assessment by the percentage determined in accordance with the formula in section 4(1).

[Subsection (1) substituted by section 54(1) of Act 17 of 2023 with effect from 1 January 2024 and applicable in respect of years of assessment commencing on or after that date]

(1A)  The royalty mentioned in section 2 in respect of the transfer of a refined mineral resource, that is oil and gas, is determined by multiplying the gross sales of the extractor in respect of that mineral resource during the year of assessment by the percentage determined in accordance with the formula in section 4(1A).

[Subsection (1A) inserted by section 54(1) of Act 17 of 2023 with effect from 1 January 2024 and applicable in respect of years of assessment commencing on or after that date]

(2)     The royalty mentioned in section 2 in respect of the transfer of an unrefined mineral resource is determined by multiplying the gross sales of the extractor in respect of that mineral resource during the year of assessment-

(a)     by the percentage determined in accordance with the formula in section 4(2); or

(b)     by the percentage determined in accordance with the formula as the Minister may announce in the national annual budget contemplated in section 27(1) of the Public Finance Management Act, 1999 (Act 1 of 1999) effective on a date mentioned in that announcement.

[Subsection (2) substituted by section 92(a) of Act 15 of 2016]

(3)     If the Minister makes an announcement contemplated in subsection (2)(b), that percentage determined in accordance with the formula comes into effect on the date determined by the Minister in that announcement and continues to apply for a period of 12 months from that date subject to Parliament passing legislation giving effect to that announcement within that period of 12 months.

[Subsection (3) added by section 92(b) of Act 15 of 2016]

Section 2 (MPRA) – Imposition of royalty

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2.   Imposition of royalty


A person must pay a royalty for the benefit of the National Revenue Fund in respect of the transfer of a mineral resource extracted from within the Republic.

[Section  2 substituted by section 131(1) of Act 7 of 2010 deemed effective on 1 March, 2010 and applicable in respect of mineral resources transferred on or after that date]