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.

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%.

Which return should be submitted and when?

The royalty return that was previously used for estimate payments (MPR2) and the return that was previously used as the annual return (MPR3) has now been standardised as the Mineral and Petroleum Resources Royalty Return (MPR3 Form).

Your filing obligations has not changed and the rules for payments and return submission is still the same.

The MPR3 form must now be used for both the 1st and 2nd estimate payments as well as the annual return.
When submitting the MPR3 form the following address should be used: mineralroyalty@sars.gov.za.

When and how should the royalty be paid?

Payments can be made via eFiling or 'SARS Other' when it comes to EFT and apply the 19 digit rules.

Each payment must be accompanied by a completed MPR3 form.

The payment advice can be obtained below. For an estimate payment, the MPR3 must be submitted after the payment was made so that SARS can verify the payment made. If no payment is required the return should be submitted stating a zero payment obligation.
Last Updated: 13/12/2017 3:12 PM     print this page
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 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.