When there is an indirect change of control of a legal entity holding a Mining Title or an Authorisation, all assignments of ownership interest over the twelve months prior to this acquisition of indirect control, which have conferred this indirect control to an individual or legal entity, are taxed according to the capital gains regime.
Indirect control is understood to be a series, without any particular limitations, of similar acquisitions of ownership interest (several companies owning interests in the same company) and/or vertical acquisitions of ownership interests (one company successively controlling one or more companies), enabling the individual or legal entity to exercise influence or control over the legal entity holding the Mining Title or Authorisation.
Influence is established when the individual or legal entity effectively participates in decisions relating to the management and financial policies of the issuing company.
Control is established:
- when the individual or legal entity directly or indirectly holds part of the capital conferring the majority of the voting rights in the issuing company’s shareholders meetings;
- or, when it holds the majority of the voting rights in this company pursuant to an agreement signed with other partners or shareholders.
- or when it actually determines the outcome of decisions, with the voting rights it exercises, in the shareholders meetings of that company.
The basis of capital gains consists in the difference between the assignment price and the net book value of all ownership interests, conferring indirect control over the legal entity holding the Mining Title or Authorisation, assigned over the twelve months prior to this indirect change of control, to the individual or legal entity who will thereafter exercise this indirect control over the legal entity holding the Mining Title or Authorisation.
This capital gain is deemed to be of Guinean origin in so far as the assets of the legal entity holding the Mining Title or Authorisation are located in the Republic of Guinea. When the assets of the legal entity whose shares or other ownership interest are assigned are located in several jurisdictions, the capital gain is calculated solely on the value of the assets belonging to the Guinean subsidiary.
Consequently, this capital gain is taxed at source in Guinea as corporate tax and at the legal rate set forth in Article 229 of the General Tax Code. The tax is deducted at source by the legal entity holding the mining Title or Authorisation. This deduction at the source is payable when the capital gain is realized.
The non-payment of the deduction at the source due is penalized by the revocation of the Mining Title or Authorisation in accordance with the provisions of this Code.
The rules for calculating indirect control over a legal entity holding a Mining Title or Authorisation in Guinea, as well as the methods of calculation, declaration and payment of this capital gain are specified by regulation.