Australian mining company Base Titanium has dismissed mining Cabinet Secretary Najib Balala’s position on royalties and Value Added Tax refunds.
In a public notice issued, the company accused the CS’s of “misleading” the public over royalties and VAT refunds in relation to the company’s operations.
Balala recently accused the Base of claiming Sh2.5 billion in VAT refunds, an amount he dismissed as unjustified.
The CS also said the company has so far only paid Sh100 million in royalties instead of Sh400 million since it started exporting last year. He also linked the company to high employment of expatriates.
“These allegations are untrue and significantly undermine the work Base is doing in implementing Kenya’s flagship, first large – scale modern mining project and its contribution to the economy of Kenya and Kwale County. Unfortunately they are also potentially damaging to Kenya’s reputation as an investment destination,” said the company.
Base said it has paid Sh226 million in royalties to the government since commencement of exports in February 2014, making it the largest single contributor of minerals royalties.
It said it also agreed to revise the royalty proposing a formula for doubling the rate to five per cent for the first five years of operation, but with a deferral mechanism for the first three years, to protect cash flows necessary to service its Sh 20 billion debt.
“We have not received acceptance of our proposal from the Ministry of Mining and therefore continue to pay royalties at the original rate of 2.5 per cent,” it said.
The company said Kenya has the highest rates compared to the global average of 3.6 per cent.
The company said it invested Sh26 billion in developing the project and paid VAT to the value of Sh2.5 billion.
” In accordance with the VAT Act, Base is entitled to claim a refund on the excess of input VAT paid less output VAT,” read the statement noting that its products are sold into the export market, hence are zero-rated.
The company said it also allocated Sh348 million to community development and has a total of 908 people employed by Base and firms directly contracted to it, where 551 are Kwale residents, an additional 307 originate from other parts of Kenya, while only 50 are expatriates.
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