Mining and Income Taxation

12 Months Ended

Dec. 31, 2022

Major components of tax expense (income) [abstract]

MINING AND INCOME TAXATION


	United States Dollar
Figures in millions unless otherwise stated	2022	2021	2020

The components of mining and income tax are the following:
South African taxation
– company and capital gains taxation1	(65.3)	(3.8)	(4.5)
– dividend withholding tax	(13.1)	(24.3)	—
– prior year adjustment - current taxation	—	0.8	(0.5)
– deferred taxation	(80.2)	(27.4)	(25.8)
– prior year adjustment - deferred taxation	1.7	(3.4)	—
Foreign taxation
– current taxation	(386.1)	(417.9)	(356.2)
– dividend withholding tax	(4.7)	—	(5.2)
– prior year adjustment - current taxation2	(5.9)	(3.5)	(0.1)
– deferred taxation	111.5	54.6	(40.2)
Total mining and income taxation	(442.1)	(424.9)	(432.5)
Major items causing the Group's income taxation to differ from the maximum South African statutory mining tax rate of 34.0% (2021: 34.0% and 2020: 34.0%) were:
Taxation on profit before taxation at maximum South African statutory mining tax rate	(395.7)	(426.5)	(400.5)
Rate adjustment to reflect the actual realised company tax rates in South Africa and offshore3	65.9	45.9	45.6
Non-deductible share-based payments	(2.3)	(4.3)	(4.9)
Non-deductible exploration expense	(0.1)	(9.6)	(0.4)
Deferred tax assets not recognised on impairment of FSE (2021: impairment and 2020: reversal of impairment)	(38.6)	(10.5)	21.2
Non-deductible interest paid	(21.7)	(22.2)	(31.2)
Share of results of equity accounted investees, net of taxation	3.4	(10.9)	(0.9)
Non-taxable capital gains portion of Yamana break fee and transaction costs	18.2	—	—
Non-taxable fair value (loss)/gain on Maverix warrants	—	(1.4)	0.4
Dividend withholding tax	(21.3)	(29.5)	(5.9)
Net non-deductible expenditure and non-taxable income	(18.2)	(26.7)	(0.7)
Deferred tax on unremitted earnings at Tarkwa and Cerro Corona	—	15.7	1.3
Deferred taxation movement on Peruvian Nuevo Sol devaluation against US dollar4	4.2	(8.6)	(7.5)
Various Peruvian non-deductible expenses	(5.3)	(7.9)	(5.8)
Deferred tax assets not recognised at Cerro Corona, net5	(14.4)	(12.2)	(0.1)
Deferred tax assets utilised/(not recognised) at Damang and Tarkwa6	1.2	(6.6)	(50.9)
Deferred tax recognised at Salares Norte7	(4.2)	96.7	12.8
Prior year adjustments	(2.7)	(6.4)	(0.2)
Deferred tax charge on change of tax rate at South Deep	(5.7)	—	—
Other	(4.7)	0.1	(4.8)
Total mining and income taxation	(442.1)	(424.9)	(432.5)

1 The US$65.3 million in 2022 includes capital gains taxation of US$65.2 million paid to South African Revenue Services on Yamana break fee.

2 The US$5.9 million in 2022 comprises US$19.2 million additional transfer pricing charges at Tarkwa and Damang, partially offset by a refund of US$13.3 million relating to hedges in Peru.

3 Due to different tax rates in various jurisdictions, primarily South Africa, Ghana, Australia and Peru.

4 The functional currency of Cerro Corona is US Dollar, however, the Peruvian tax base is based on values in Peruvian Nuevo Sol.

5 Deferred tax assets amounting to US$14.4 million were not recognised during the year ended 31 December 2022 at Cerro Corona to the extent that there is insufficient future taxable income available. Deferred tax assets were not recognised during the year related to deductible temporary differences on additions to fixed assets in the current financial year that would only reverse after the end of the life-of-mine (“LoM”) of Cerro Corona. In making this determination, the Group analysed, among others, forecasts of future earnings and the nature and timing of future deductions and benefits represented by deferred tax assets.

During 2021, deferred tax assets of US$12.2 million were not recognised. This comprised deferred tax assets of US$15.6 million not recognised relating to losses on financial instruments of US$45.8 million due to uncertainty in the deductibility of these losses, partially offset by deferred tax assets amounting to US$3.4 million that were previously not recognised, recognised due to the increase in future taxable income available because of a higher long-term gold price used in the 2021 assessment.

6 During 2022, deferred tax assets of US$1.2 million (2021: not recognised of US$6.6 million and 2020: not recognised of US$50.9 million) were utilised at the Ghanaian operations. The US$50.9 million in 2020 comprised US$41.0 million deferred tax assets relating to losses on financial instruments of US$120.6 million (these losses are ring-fenced for tax purposes and there are no expected future gains on financial instruments to utilise against these losses) and US$9.9 million relating to the Tarkwa expected credit loss provision of US$29.0 million. The US$1.2 million utilised in 2022 (2021: not recognised of US$6.6 million) comprised US$6.0 million (2021: US$14.0 million) relating to the Ghana expected credit loss provision of US$17.5 million (2021: US$41.1 million), offset by US$7.2 million (2021: partially offset by US$7.4 million) deferred tax assets recognised relating to the utilisation of previous losses on financial instruments (as explained above).

7 During 2021, deferred tax assets of US$96.7 million was raised. At 31 December 2021, there has been significant progress with the construction of the Salares Norte project as indicated by total project progress at 62.5%, construction progress at 55% and the early forecast curve being aligned with the scheduled finish of 2023. The project is expected to deliver significant value and all tax credits are expected to be fully utilised before they expire. During 2020, deferred tax assets of US$12.8 million relating to assessed losses were recognised during the year at Salares Norte, to the extent that there was sufficient taxable income available in 2020 to offset against these losses. The taxable income in 2020 related mainly to gains on the Salares Norte foreign currency hedge.

Notes to the Consolidated Financial Statements continued

for the year ended 31 December 2022

10. MINING AND INCOME TAXATION continued


	United States Dollar
	2022		2021		2020

South Africa – current tax rates
Mining tax1	Y = 34 – 170/X		Y = 34 – 170/X		Y = 34 – 170/X
Non-mining tax2	28.0	%	28.0	%	28.0	%
Company tax rate	28.0	%	28.0	%	28.0	%
International operations – current tax rates
Australia	30.0	%	30.0	%	30.0	%
Ghana	32.5	%	32.5	%	32.5	%
Peru	29.5	%	29.5	%	29.5	%

1 South African mining tax on mining income is determined according to a formula which takes into account the profit and revenue from mining operations. South African mining taxable income is determined after the deduction of all mining capital expenditure, with the proviso that this cannot result in an assessed loss. Capital expenditure amounts not deducted are carried forward as unredeemed capital expenditure to be deducted from future mining income. Accounting depreciation is ignored for the purpose of calculating South African mining taxation. During June 2022, the South African Revenue Services published the draft 2022 Rates & Monetary Bill, inclusive of an amendment to the gold tax formula from Y = 34 – 170/X to Y = 33 – 165/X in respect of year assessments ending on or after 31 March 2023, which is considered to be substantively enacted. This resulted in the effective mining tax rate used for deferred tax purposes for Gold Fields Operations Limited ("GFO") and GFI Joint Venture Holdings (Proprietary) Limited ("GFIJVH"), owners of the South Deep mine, decreasing from 29% at 31 December 2021 to 28% at 31 December 2022, amounting to a charge of R76.2 million (US$4.6 million) through profit or loss.(2021: 29% and 2020: 29%). In the formula above, Y is the percentage rate of tax payable and X is the ratio of mining profit, after the deduction of redeemable capital expenditure, to mining revenue expressed as a percentage.

2 Non-mining income of South African mining operations consists primarily of interest income. The corporate income tax rate will be reduced from 28% to 27% for tax years ending on or after 31 March 2023, and is considered to be substantively enacted.

In the wake of the Ghanaian fiscal crisis, the Ghanaian government has conducted increasingly stringent audits on its biggest corporate taxpayers (many of them multinationals), including Gold Fields, and has imposed additional tax liabilities, which are under discussion. In addition, Gold Fields is experiencing more onerous processes in claiming and renewing rebates and exemptions under the Development Agreement. The two audits by the Ghana Revenue Authority are a transfer pricing audit covering 2014 to 2019 and a tax audit for 2018 to 2020. The earlier transfer pricing audit has been resolved, while Gold Fields has received an assessment of US$124.1 million under the findings of the 2018 to 2020 tax audit. Gold Fields is reviewing the assessment and disputing the findings, amongst others the deductibility of waste stripping costs amounting to US$63.4 million of the assessment. Negotiations are under way following a required up-front deposit. No tax liability was raised for the above at 31 December 2022.

Deferred tax is provided at the expected future rate for mining operations arising from temporary differences between the carrying values and tax values of assets and liabilities. In South Africa the tax rate which has been used for deferred tax purposes for mining assets is Y = 33 – 165/X and for non-mining assets is 27%, on the basis that these rates are considered to be substantively enacted.

At 31 December 2022, the Group had the following estimated amounts available for set-off against future income:


	South African Rand
	2022			2021
	Gross unredeemed capital expenditure	Gross tax losses	Gross tax losses not recognised	Gross unredeemed capital expenditure	Gross tax losses	Gross tax losses not recognised
	R'million	R'million	R'million	R'million	R'million	R'million

South Africa1
Gold Fields Operations Limited	9,322.5	693.1	—	10,492.3	746.4	—
GFI Joint Venture Holdings (Pty) Limited	11,895.8	692.7	—	13,193.3	746.7	—
Gold Fields Holdings Company Limited	—	95.4	95.4	—	143.3	143.3
	21,218.3	1,481.2	95.4	23,685.6	1,636.4	143.3

1 These deductions are available to be utilised against income generated by the relevant tax entity and do not expire unless the tax entity concerned ceases to operate for a period of longer than one year. Under South African mining tax ring-fencing legislation, each tax entity is treated separately and as such these deductions can only be utilised by the tax entities in which the deductions have been generated. South African tax losses and unredeemed capital expenditure have no expiration date.

10. MINING AND INCOME TAXATION continued


	United States Dollar
	2022			2021
	Gross unredeemed capital expenditure	Gross tax losses	Gross tax losses not recognised	Gross unredeemed capital expenditure	Gross tax losses	Gross tax losses not recognised
	US$ million	US$ million	US$ million	US$ million	US$ million	US$ million

South Africa1
Gold Fields Operations Limited	547.7	40.7	—	658.2	46.8	—
GFI Joint Venture Holdings (Pty) Limited	698.9	40.7	—	827.7	46.8	—
Gold Fields Holdings Company Limited	—	5.6	5.6	—	9.0	9.0
	1,246.6	87.0	5.6	1,485.9	102.6	9.0
International operations
Exploration entities2	—	219.7	219.7	—	227.6	227.6
Minera Gold Fields Salares Norte3	507.0	123.3	—	458.3	87.6	—
Gold Fields La Cima S.A.4	—	—	—	—	45.8	45.8
Abosso Goldfields Limited5,6	—	24.9	24.9	—	31.5	31.5
Gold Fields Ghana Limited5,7	—	26.4	26.4	—	46.9	46.9
	507.0	394.3	271.0	458.3	439.4	351.8

2 The total tax losses of US$219.7 million (2021: US$227.6 million) comprise US$1.1 million (2021: US$3.1 million) tax losses that expire between one and two years, US$4.0 million (2021: US$4.3 million) tax losses that expire between two and five years, US$0.7 million (2021: US$1.2 million) tax losses that expire between five and 10 years, US$171.3 million (2021: US$180.4 million) tax losses that expire after 10 years and US$42.6 million (2021: US$38.6 million) tax losses that have no expiry date.

3 These deductions are available to be utilised against income generated by the relevant tax entity and do not expire.

4 At 31 December 2022, deferred tax assets at La Cima of US$nil (2021: US$45.8 million) not recognised relate to losses on financial instruments.

5 Tax losses may be carried forward for five years. These losses expire on a first-in-first-out basis. Tax losses of US$51.3 million (2021: US$31.5 million) expire in three years and tax losses of US$nil (2021: US$46.9 million) expire in four years.

6 At 31 December 2022, tax losses at Damang of US$24.9 million (2021: US$31.5 million) comprise deferred tax assets not recognised relating to financial instruments losses.

7 At 31 December 2022, deferred tax assets at Tarkwa of US$26.4 million (2021: US$46.9 million) not recognised relating to losses on financial instruments.