The Sierra Leone government has revoked a generous tax break for mining company Sierra Rutile Limited (SRL), citing the company’s improved financial performance as a breach of good faith.

In a letter addressed to SRL and made available to Sierraloaded, Finance Minister Shęku A.F. Bangura announced the government’s decision to revert to the original 2001 agreement’s fiscal regime, effective July 1st, 2023. This move cancels the temporary tax base reset incentives granted in August 2021 to help SRL recover from financial difficulties.

The minister justified the action by highlighting SRL’s “increasingly growing reported revenues and Net Profit After Tax of over $75 million in each of the last two years.” He argued that this success, driven by increased production and rutile prices, contradicted the justification for the tax break and deprived the government of much-needed tax revenue.

Bangura emphasized that the initial tax incentives were offered “in good faith” to ensure SRL’s survival after it threatened to suspend operations in 2021. However, he expressed disappointment that SRL failed to inform the government about its improved financial situation.

“This is completely unfair to the Government and people of Sierra Leone,” Bangura stated, pointing out the missed opportunity to use the withheld tax revenue for development programs.

The letter instructs the National Revenue Authority to collaborate with SRL to determine the revised tax obligations under the original agreement. It concludes by urging SRL to “show responsible business practice” and accept the decision.