Tax regime: Consensus found between QMM and the State

The renewal of the establishment agreement of QMM, (Qit Mineral Madagascar), the main mine of Madagascar, subsidiary of the mining giant Rio Tinto, was announced yesterday in the Council of Ministers.

The mining company, which extracts ilmenite, has been established in Fort-Dauphin since 1998. The agreement specific to taxation and the customs regime for a period of 25 years expired in February 2023. This contract was renegotiated two years ago between QMM and the State and will redefine the new regime for the next 25 years.

In the new agreement, which will still have to be ratified by Parliament, QMM’s mining royalty rate will have to be increased from 2 to 2.5%. The mining company will allocate 12 million dollars of anticipated dividend to the State for the year 2023. In addition, the State will have to receive 40% of the dividends from this year until 2030 even if the initial investment of QMM is not amortized yet. From 2031 to 2048, this share will rise to 60%.

For the repair work on the RN13, the road linking Fort-Dauphin to Ihosy, QMM will have to contribute 8 million dollars.

It was also decided that in the future, if there are recapitalizations, the Malagasy side will no longer increase its share. Thus, the State will keep its investments at 15% of the totality of the action and at 20% of its social rights.

As a reminder, the government, which is a shareholder of QMM, demanded in 2019 an audit of the accounts, investments and management of this major project. The main reason for this audit seems to be linked to the recurring recapitalizations required by QMM, which was on its third capital increase since 2012.

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