Top Five Fiscal Incentives Boosting Investment in the MSGBC Basin

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Income Tax Exemption for Mining Projects – Senegal

Rich in gold, phosphate, iron and other minerals, Senegal is making efforts to accelerate the development of its mining industry, which has been identified as a priority sector under the country’s Plan for an Emerging Senegal. Senegal’s investment code provides certain tax benefits, such as temporary exemption from import duties and income taxes for resource exploration and mining endeavors. All qualifying investments benefit from two to three years of exemption from duties on imports of goods. Also included is an exemption from direct and indirect taxes for the same period. To qualify for these breaks, firms must invest more than $165,000, or in activities that lead to an increase of 25% or more in productive capacity.

No VAT on Equipment Dedicated to Renewable Energy Production – Senegal

Senegal is also aiming to expand its renewable energy sector, particularly through the development of large-scale solar and wind power production. To date, the Senegalese government has relied on an attractive fiscal framework to encourage clean energy investment. A decree issued in 2020 exempts 22 types of equipment used in solar, wind and biogas energy production from Value Added Tax (VAT). These measures aim to reduce the acquisition costs of these items by 18%, making decentralized power solutions more accessible, especially in rural areas. The VAT exemption addresses a long-standing request from industry stakeholders in the renewable energy sector and advances the government’s goal to achieve universal access to electricity by 2025, while reducing greenhouse gas emissions.

Full Tax Exemption for Raw Material Processing – Mauritania

Companies engaged in raw material processing can enjoy tax benefits in Mauritania’s Special Economic Zones, such as the Port of Nouadhibou and currently under development Nouakchott energy hub. To qualify for these exemptions, companies must invest a minimum of $1.6 million, create a workforce of at least 50 permanent employees and demonstrate the potential to export at least 80% of their goods or services. These tax breaks offer promising prospects for mining and gas companies, incentivizing them to process materials like iron ore into finished steel products or convert natural gas into LNG directly on-site.

Preferential Tax Regime for Infrastructure Projects – Guinea-Conakry

Investment is welcomed in Guinea-Conakry, which has implemented tax breaks applicable to road, port, airport and rail infrastructure projects in an effort to stimulate economic development around its capital city and northern provinces.  During the initial phase, eligible companies enjoy import duty and tax exemptions, including VAT. Additionally, companies are exempt from certain local taxes and fees, such as professional licenses and real estate taxes. When the infrastructure goes into operation, exemptions include a progressive reduction in minimum flat-rate taxes and corporate taxes over the first six years.

Corporate Tax Holiday for Energy Investors – The Gambia

Following neighboring oil and gas discoveries in Senegal and Mauritania, The Gambia plans to increase offshore exploration, with a view to replicating the same exploratory success. To achieve this goal, the country has set up an enticing fiscal structure that provides incentives to companies operating in the energy sector. Investors receive incentives like a corporate tax holiday, depreciation allowance, withholding tax exemptions, and import tax waivers for machinery and materials for five years after the investment agreement is signed. To qualify for these benefits, investors must commit a minimum of $250,000 to the sector.

Learn more about the investment policies and incentives governing the region’s energy and mining sectors by attending the MSGBC Oil, Gas & Power 2023 Conference & Exhibition, taking place in Nouakchott from November 21-22. The event brings together international investors and influential players in the energy sector to explore business opportunities across the region.

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