MINERAL AND PETROLEUM RESOURCES ROYALTY

What's New?

  • 01 October 2018 - Mineral and Petroleum Resource Royalties Return (MPR3)
    SARS rolled out a new form for Mineral and Petroleum Resources Return and Payment advice. The form is available to download from 01 October 2018 and the existing MPRR taxpayers will be expected to complete the new MPRR return and payment data form:
    • The old Mineral and Petroleum Resources Payment advice (MPR2) and Mineral and Petroleum Resources Return (MPR3) have been incorporated into one Mineral and Petroleum Resources Return (MPR3), to declare you must complete the new Return (MPR3).
    • The return MPR3 has been updated with the type of mineral type, unit of measure and volume transferred (quantity) of mineral sold which was previously not included in the MPR3.
    • The MPR3 form has been standardised to cater for all the attributes namely filing, payment and return obligations below:
 
MPR3 Form​ Filing ​ Payment​
1st Estimate​ ​First Estimate return must be submitted before the end of six (6)  months, after the start of the year of assessment. ​First payment – 50% of estimated total liability for the year of assessment – six (6) months after start of financial year.
2nd Estimate ​ ​Second Estimate return must be submitted before the end of the year of assessment (therefore before the end of 12 months after the start of the year of assessment– applicable if no change was made to the financial year end). ​Second payment – balance of estimated total liability for the year of assessment – at financial year-end (therefore before the end of 12 months after the start of the year of assessment – applicable if no change was made to the financial year end).
3rd Optional/ Top - up​ ​An optional third top-up return, referred to as the “Return of Excess”, can be used to declare additional liability for the year of assessment, that was not catered for in the first and second estimate returns (therefore, if required, before the end of 18 months after the start of the year of assessment – applicable if no change was made to the financial year end). ​Optional Top-up Third Payment – Amounts not catered for in first and second estimate for the year of assessment (therefore, if required, before the end of 18 months after the start of the year of assessment – applicable if no change was made to the financial year end).
Final Settlement​ ​An annual return must be submitted twelve months after the end of the year of assessment for final reconciliation purposes. ​Final liability settlement – 12 months after year-end, where final return liability exceeds the payments made for 1stand 2nd, Estimate and optional 3rd payment.
 
    • Payments can be made via eFiling Additional Payment function (also referred to as “Ad Hoc” payment) or 'SARS Other' when it comes to EFT, apply the  19-digit rule (TAXREFNUMBX00000155) and each payment must be accompanied by the completed Mineral and Petroleum Resources Royalty return (MPR3).
    • Payments must preferably be made via eFiling into the SARS account and each payment must be accompanied by a completed return (MPR3).
    • Payments can also be made via the bank channel (not preferred channel), by using EFT and this method requires application of the 19 digit rule (TAXREFNUMBX00000155).


Top tip: Taxpayers should be urged to move to eFiling as a payment channel as soon as possible. The bank channels (EFT and over the counter payments) will be discontinued for MPRR during the first Quarter of 2019, which implies that all MPRR payments will only be payable by using the eFiling channel in future.

You can access the updated MPRR external guide and MPR3 form below:

What is it?

In the past, mineral and petroleum resources were privately owned, meaning that payment for the extraction of these resources was payable to the State only under certain circumstances, e.g. where mining had been conducted on State-owned land.
 
To bring South Africa in line with prevailing international norms, the Department of Minerals and Energy promulgated the Mineral and Petroleum Resources Development Act, 2002 (MPRDA) in terms of which these resources are recognised as the common heritage of all the people of South Africa with the State as custodian thereof for the benefit of all South Africans. 
 
The Minister of Finance must, in terms of section 3(4) of the MPRDA determine and levy the State royalty by means of an Act of Parliament. This the Minister did by promulgating the Mineral and Petroleum Resources Royalty Act, 2008 as well as the Mineral and Petroleum Resources Royalty (Administration) Act, 2008, both of which are administered by SARS.
 
The royalty is triggered on the transfer of a mineral royalty extracted from within the Republic.  As is the case for all other taxes, duties, levies, fees or money collected by SARS, the royalty collected is paid to the National Revenue Fund.

Who is it for?

The following persons must register for the payment of the royalty to SARS:
  • Any person who holds a prospecting right, retention permit, exploration right, mining right, mining permit or production right or a lease or sublease in respect of such a right; or
  • Any person who wins or recovers a mineral resource extracted from within the Republic.

What steps must I take?

An application form MPR1 must be completed. It is available below and can also be obtained at any SARS branch. Once completed, it must be scanned and emailed to mineralroyalty@sars.gov.za. The completed MPR3 form must also emailed to mineralroyalty@sars.gov.za.

What is the rate for the royalty?

The rate for the royalty is determined according to a formula contemplated in subsections (1) and (2) of section 4 of the Mineral and Petroleum Resources Royalties Act, 2008 and differentiates between the refined and unrefined conditions of the mineral resource, and are currently as follows –
  • for refined mineral resources: the minimum of 0.5% to a maximum of 5%
  • for unrefined mineral resources: the minimum of 0.5% to a maximum of 7%.

When and how should the royalty be paid?

Payments can be made via the eFiling channel using the Additional payment option. Note that bank channels will be discontinued for MPRR payments on 31 January 2019, which implies that all MPRR payments will only be payable by using the eFiling channel. Please ensure that the eFiling channel is set up for each MPRR taxpayer and start making all payment via this channel to ensure no issues are experienced when banking channels are discontinued.

Note that each payment must be accompanied by a completed MPR3 (new) form as required by legislation for the two provisional payments, the third excess payment and the final return (if a further payment is necessary).

To access this page in different languages click on the links below:
 
Last Updated: 11/12/2018 9:39 AM     print this page
SARS eFiling eFiling Login eFiling Register Now eFiling Forgot Password eFiling Forgot Username E@syFile
FIND A PUBLICATION
FIND A FORM
FIND AN FAQ

 Top FAQs

Will penalties be levied on underestimation of royalty payable?
Yes. If the royalty paid is underestimated by an amount of more than 20%, the Commissioner may impose a penalty that may not exceed 20%

Do I need to pay the Mineral Royalty even if I am making a loss?
Yes. A minimum royalty rate of 0.5% must be paid even if you are making a loss.

Is the Mineral Royalty payable on my profit?
No. The Mineral Royalty is payable on your gross sales for the particular mineral resource.

Who is exempt from the Mineral Royalty?
Certain small Businesses are exempt from Mineral Royalty. The following conditions must be met on an annual basis: The gross sales of the extractor in respect of all mineral resources transferred do not exceed R10 million during the year.

Will I receive a Mineral Royalty tax number on registration?
No. Your income tax reference number must be used for declaration of Mineral Royalty.