Legal Reforms to Watch in Solomon Islands

By Dirk Heinz

All eyes are on Solomon Islands lawmakers this quarter to finalise a number of important new bills which the Solomon Islands Government wants tabled before parliament as soon as possible. According to various public statements made by SIG, including at the 12th Australia – Solomon Islands Business Forum held in Brisbane in April, 2023 is set to be one of the most important years of legislative reform in Solomon Islands in recent history as the tax, forestry and mining, among other sectors all face considerable reform. While only limited information about the draft bills has been made publicly available, overhauls of the existing legislation in each area is expected to be substantial given current legislation in all of these sectors have been a source of political, economic and social concern in the country for many years. Below is a snapshot of what Solomon Islanders can expect from the new legislation set to be debated in the coming months.

Mineral Resources Bill

The existing Solomon Islands’ Mines and Minerals Act is now three decades old and has failed to keep up to date with advancement in other sectors. A better framework regarding royalties and benefits which need to be paid to customary landowners and communities, better methods for delineation of customary landowner boundaries, vastly improved environmental practices and enforcement and more appropriate taxation on mineral exports is long overdue in the Solomon Islands and you can expect the new Bill to overhaul existing frameworks for regulation of these issues. To help it prepare the Bill, SIG engaged foreign public law and legislative drafting advisor Professor William Kosar. Professor Kosar has worked with governments across Africa and Central Asia. It is unclear (based on publicly available information) what mining sector experience Professor Kosar has. Timing for the tabling of the Mineral Resources Bill to parliament is unclear other than it has been touted as being something that should occur in 2023.

Value Added Tax Bill

A new Value Added Tax Bill is currently in the final stages of development which, if passed, is expected to make considerable reforms to the current tax framework in Solomon Islands. Both Ministry of Finance and the Solomon Islands Inland Revenue Department have said that under the new Bill a standard single VAT of 15% is proposed to be charged on most goods and services. SIG has stated that the VAT rate under the proposed Bill has been calculated to provide sufficient revenue to replace import duty (except for motor vehicles and items that would be excisable if domestically produced), goods and sales tax, stamp duty and accommodation levy. Customs will collect VAT on imports, and most businesses will charge VAT on the goods and services they sell. All supplies of goods and services will be subject to VAT unless a specific concession is included in the Act. Some industries will be exempt for VAT such as Education, Medical services, Church groups, financial services (including life insurance) and local buses and taxis but not hire cars for tourists and tour buses. The Bill was due to be tabled in April but that was postponed and it is not clear when it will be introduced in Parliament.

Forestry Bill

The long awaited Forestry Bill was set to be tabled before Parliament before the end of 2022 but it is still yet to be finalised. Some argue that reform of the current legislation governing the forestry sector is perhaps the most overdue of any laws in the Solomon Islands. Those that are more cynical argue that it may be too little too late, considering the damage foreign mining companies have already wrought on the Solomon Islands for the past 50 years. Details of what reforms will be included in the bill are few, but many Solomon Islanders would expect far more strict licencing requirements, enforcement of logging malpractice and higher penalties for breaches, as well as enormous improvement to environmental monitoring and ecosystem management to be at the centre of new reforms. An updated timeline for the tabling of this Bill is not currently clear.