Scrap Mining Tax Incentives, Review Royalties – IEA Urges Government

The Institute of Economic Affairs (IEA) has urged government to abolish tax incentives and review royalty rates in Ghana’s mining sector to ensure the country derives maximum value from its natural resources.

According to the policy think tank, the fiscal and legal frameworks regulating the extractive industry are outdated and overly generous to multinational mining companies, a situation it says has denied the nation its fair share of revenue from resource exploitation.

Presenting findings at the Institute’s seminar series on Ghana’s natural resource management framework, Senior Research Fellow, Dr Eric Oduro Osae, said the country’s mining laws, particularly the Minerals and Mining Act, 2006 (Act 703), require urgent reforms to reflect current realities and local technical capacity.

He noted that despite over a century of mining activity and significant mineral wealth, Ghana continues to receive low returns compared to the volume of minerals extracted.

The IEA’s review revealed that of the US$7.1 billion total mineral revenue recorded in 2024, fiscal payments including taxes, royalties, and dividends — amounted to GH¢17.68 billion, which the Institute described as far below the country’s potential earnings given the extent of fiscal concessions and capital flight.

The Institute argued that existing incentives such as tax holidays, royalty caps and stability agreements have tilted the benefit structure in favour of foreign firms, limiting domestic value retention and weakening local participation.

It further observed that many of these incentives are enshrined in laws developed under outdated assumptions of limited local expertise, a notion the IEA believes no longer reflects the nation’s current capabilities.

“All these benefits if quantified will tell you that we are giving out a lot to the mining sector,” Dr Oduro Osae stated.

To address the situation, the Senior Research Fellow proposed a comprehensive review of the fiscal regime governing the extractive sector. This, he said, should include abolishing tax waivers for mining firms, revising royalty rates to reflect the true value of resources, strengthening local ownership and participation frameworks, and ensuring that all dispute resolution mechanisms are handled within Ghanaian courts.

“If you match these benefits against what we give to the mining firms, you realise that it creates a huge gap. How do we close this gap? I propose that we review the ownership structures to encourage local participation. I also propose that we abolish tax incentives and review royalty rate. The capping at 5% may not be helping but if you don’t cap it at 5% what is the alternative? The alternative is to work hand in hand with the mining companies to make sure that we are able to increase production so that the royalties can increase. Let us improve transparency and accountability in mobilization and utilisation of what we even get from the mining sector,” Dr Oduro Osae said.