Members of the National Assembly, on Wednesday, amended the Income and Sales Tax Amendment Bill 2007, at the fourth meeting of the Asembly in the 2007 legislative year. The Income and Sales Tax Act was  first approved by  the National Assembly in August 2004

In September this year, the National Assembly passed an amendment to the second schedule of the Act, which governs the operations of petroleum exploration and other related activities. This amendment was necessitated by the need to make the law relating to Petroleum operations more responsive to current trends, especially because The Gambia is actively encouraging investment in this important and, hitherto unexploited, sector of the economy.

The bill seeks to clarify the meaning of “Specific Rate”, which, as currently drafted, indicates the rate of tax, but does not clearly state which party will be responsible to pay the additional profit tax (APT). The proposed amendment clearly specifies the responsibility for paying the Additional Profits Tax under Part III of the schedule as the more appropriate Part, and leaves the rate structure under Part 1.

Tabling the bill for amendment, Musa Gibril Bala Gaye, secretary of state for Finance and Economic Affairs said after publication of the Income and Sales Tax (amendment) Act 2007, in Gazette Notice No. 20 of 19th October 2007, it became apparent that certain provisions in the new second schedule to the Act were giving rise to different interpretations, in addition to certain typographical errors in the text.

According to him, the government is actively promoting investment in The Gambia in order to bring about economic growth and development for the benefit of the citizens of this nation.

“In doing so, the government is aware that such investment must devolve to the people through taxation of such economic activities. The petroleum industry, especially world crude oil prices, is sometimes driven by factors other than direct investments in the activity. Experience has shown that such factors may lead to the investor earning windful profits,” he said.

SoS Gaye said that the other fundamental change in the schedule is to allow government the flexibility of taxing such windful profits through negotiating the additional profits tax with any future applicant for a petroleum exploration license or permit under the Petroleum Act, while guaranteeing the country a minimum additional profit tax of 10% in a worst case scenario.

He then noted that it is necessary to enact the proposed amendments in order to remove the responsibility of different interpretations of the law, and any potential conflict to help guarantee the smooth operation of this very important sector and to ensure that The Gambia is legally protected in its desire to secure maximum benefits from the exploitation and taxation of the petroleum and gas deposits for the benefit of posterity.