South African Mineral Export Taxes Possible Under EU EPA

by Lorys Charalambous, Tax-News.com, Cyprus

24 July 2014

According to South Africa's Trade and Industry Minister Rob Davies, one of the major benefits that his country has taken out of the agreed Economic Partnership Agreement (EPA) with the European Union (EU) is that the new treaty allows some policy space for the introduction of mineral export taxes.

Once implemented, the EPA will enable duty- and quota-free access to the EU market for products, particularly agricultural goods, from six Southern African Development Community (SADC) members – Botswana, Lesotho, Mozambique, Namibia, South Africa, and Swaziland. South Africa's existing Trade, Development, and Cooperation Agreement (TDCA) with the EU will effectively be upgraded.

Davies said South Africa had sought to improve access to the EU market over and above what they currently obtain under the bilateral TDCA, specifically access for South Africa's agricultural products.

South Africa has achieved improved market access for 32 agricultural products, with a significant improvement in access to the EU market for wine (110m liters duty free), sugar (150,000 tons duty free) and ethanol (80,000 tons duty free). There is also improved access for exports of flowers, dairy, fruit, and fruit products.

However, Davies also attached great significance to the EPA's easing of export tax restrictions on mineral products, which were effectively restricted under the TDCA to the diamond export levy. Although the removal of those restrictions had been resisted by the EU, Davies pointed out that export taxes were permitted under World Trade Organization rules.

Although the Government currently has no plans to introduce further export taxes, he confirmed the ability to do so would be of great help for the SADC countries to support their future industrialization programs, which look to reduce raw mineral exports while increasing domestic mineral processing.

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