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By Mathieu Bonkoungou
OUAGADOUGOU, June 26 (Reuters) - Burkina Faso’s transitional parliament passed a new mining code on Friday that abolishes a previous 10 percent tax break on mining company profits and obliges firms to pay into a local development fund.
The adoption of the new code, which replaces 12-year-old mining regulations, was among requirements set by the World Bank for the release of $100 million in budget support for the West African country.
The funds were frozen in February pending passage of the new code and an anti-corruption law, which was adopted in March.
The two pieces of legislation had long been called for by donors and among those demanded by protesters who took to the streets in October, forcing veteran leader Blaise Compaore to step down and flee the country after nearly 30 years in power.
Burkina Faso is Africa’s fourth biggest gold producer and the precious metal accounts for roughly 20 percent of gross domestic product.
Two dozen firms operate in the sector, including Semafo , IamGold and Avocet Mining. They had previously benefited from corporate tax rates lower than other nations in West Africa.
“We think that in the context in which we are living today it’s time to move from an attractive code (for miners) to a code for community development,” said Energy and Mines Minister Boubacar Ba.
Under the new regulations, companies with exploitation permits will pay the normal tax rate on profits of 27.5 percent.
Firms with industrial mining licences will pay 1 percent of monthly turnover excluding taxes or 1 percent of the value of extracted minerals into a local development fund. It was not clear how it would be decided which of the two payment measures would be used.
The state will also pay 20 percent of its mining revenues into the fund.
Burkina Faso’s interim leadership is due to usher the country to elections later this year.
But the new authorities are having to shore up revenues in the face of slowing economic growth as the political instability has exacerbated the impact of lower commodity prices and a regional Ebola outbreak.
The World Bank has provided around $300 million in support to Burkina Faso in each of the last four years.
The new mining code includes provisions for the creation of a fund to rehabilitate artisanal mining sites and prohibit the use of harmful chemicals, and another to finance geological research and support education in earth sciences. (Writing by Joe Bavier; Editing by Mark Heinrich)