P.N.D.C.L.

122
ADDITIONAL PROFIT TAX ACT, 1985

ARRANGEMENT OF SECTIONS
1. Imposition of additional profit tax.
2. Ascertainment of carry-forward cash balance.
3. Additional profit tax on value of carry-forward cash balance.
4. Computation of carry-forward cash balance.
5. Application of Internal Revenue Act, 2000.
6. Interpretation.
7. Repeal.
8. Transitional provisions.

P.N.D.C.L. 122
ADDITIONAL PROFIT TAX ACT, 19851(1)

AN ACT to provide for the imposition of tax on mining operations and for related matters.

1. Imposition of additional profit tax

A person who is engaged in mining operations shall, in respect of each year of assessment, pay, in
addition to the income tax payable under the Internal Revenue Act, 2000 (Act 592) an additional profit
tax on the carry-forward cash balance as at the last day of each year of assessment.

2. Ascertainment of carry-forward cash balance

(1) For the purposes of determining the carry-forward cash balance for a year of assessment, the
following deductions and additions shall be made from and to the chargeable income computed in
accordance with the Internal Revenue Act, 2000 (Act 592):
(a) deductions from chargeable income,
(i) income tax paid or payable on company profits for the year of assessment;
(ii) capital expenditure incurred during the year of assessment;
(iii) additions made to inventory during the year of assessment;
(b) additions to chargeable income,
(i) interest paid on capital employed in the mining operations;
(ii) capital allowances granted or due;
(iii) negative cash balance brought forward from the previous year.
 (2) In order to determine the brought-forward cash balance for a year of assessment where the
carry-forward cash balance for the previous year is negative, the negative cash balance should be adjusted
by a factor approved by the Minister responsible for Finance to reflect the normal rate of return, and
further multiplied by the prevailing exchange rate factor.

3. Additional profit tax on value of carry-forward cash balance

The additional profit tax shall be chargeable on the value at the end of each tax year of the
carry-forward cash balance of a person engaged in mining operations at the rate of twenty-five percent.

4. Computation of carry-forward cash balance

In computing the carry-forward cash balance for the purposes of this Act, the Commissioner shall
disregard the transactions carried out by a person with the sole purpose of reducing the value of the
carry-forward balance on which the additional profit tax shall be based.

5. Application of Internal Revenue Act, 2000

The provisions of the Internal Revenue Act, 2000 (Act 592) relating to its administration, returns,
assessments, collection, recovery and repayment of tax, objections, offences and penalties and any other
provision of that Act, shall, with the modifications necessary for giving full effect to this Act, apply to the
tax imposed by this Act as they apply with respect to income tax imposed under that Act.

6. Interpretation
In this Act, unless the context otherwise requires,
“additional profit tax” means tax imposed under section 1;
“Commissioner” means the Commissioner of the Internal Revenue Service;
“exchange rate factor” means the exchange rate at the end of the year (number of cedis to the
dollar, greater than 1.0) divided by the prevailing exchange rate at the end of the preceding year
(number of cedis to the dollar, greater than 1.0).

7. Repeal
Omitted.2(2)

8. Transitional provisions
Spent.3(3)
 Endnotes
1 (Popup - Footnote)
1. This Act was originally issued as a Decree, P.N.D.C.L. 122, on 29th August, 1985 and notified in the
Gazette on 25th October, 1985.
2 (Popup - Footnote)
2. Section 7 repealed the Mineral Duty Decree, 1975 (N.R.C.D. 346) as amended.
3 (Popup - Footnote)
3. The original provision read:
“(1) For the purpose of ascertaining the value of any capital expenditure incurred during the year, 1st
January to 31st December, 1984 and for that year only, by any person engaged in mining operations,
the Commissioner shall also take into account the residual value of all existing capital assets being
used in such mining operations before the coming into force of this Law.
(2) The qualifying expenditure of such existing capital assets shall be deemed to have been incurred
during the year (1st January to 31st December, 1984) at a notional value which shall be determined, taking into
account the exchange rate factor, by the Secretary responsible for Finance and Economic Planning whose decision
shall be final.”