.MWALE

By CATHERINE NYIRENDA –

GOVERNMENT has re-introduced the 30 per cent corporate income tax on mining operations and pegged mineral royalty tax for open cast and underground mining at nine per cent.
The tax revision will result in an estimated loss of K2.3 billion to the Treasury but the Ministry of Finance will take the necessary steps to address the shortfall.
The long awaited tax changes will take effect on July 1, once the Bill has been approved by Parliament in its next session.
Acting Chief Government spokesperson, Vincent Mwale announced the levy changes to the mines after Cabinet’s seventh special meeting held at State House yesterday.
He was flanked by State House Special Assistant to the President for Press and Public Relations Amos Chanda.
“The approved mining taxation system would bring about the desired stability, predictability, consistency and transparency in the sector,” Mr Mwale said.
“In order to implement today’s (yesterday’s) Cabinet decision, Government will undertake all the necessary administrative and legislative measures rapidly. Once the Bill has been approved by Parliament, the effective implementation date will be July 1, so that there is logical sequencing in the merging of two tax regimes in one fiscal year”.
Other changes were corporate income tax on income earned from mineral processing which was set at 35 per cent.
Variable profit tax on income earned from mining operations would be 15 per cent when taxable income exceeded eight per cent of gross sales.
He said deduction of tax losses carried forward would be limited to 50 per cent of taxable profits.
Stiffening of penalties for tax offenders was also on the Cabinet agenda with the Zambia Revenue Authority targeting to introduce stringent enforcement mechanisms to keep a close eye on mining
activities.
“ZRA will introduce stringent enforcement mechanisms to effectively monitor mining activities and ensure greater transparency among mining companies when reporting revenue and expenditure,” Mr Mwale who is also Youth and Sports Minister said.
Government also planned to link mining taxation to the Medium Term Expenditure Framework to guarantee greater stability and predictability in mine management.
The tax adjustment arose from the previously announced taxing which saw increased royalties for open pit mines to 20 per cent from six per cent and those for underground mines to eight per cent from six per cent in January, which had unsettled the future of mining.
Global mining firms running mines in the country expressed concern that the royalties could negatively affect their earnings and job losses in the sector were projected at around 12,000.
President Edgar Lungu intervened in the matter directing ministers of Finance and Mining, Alexander Chikwanda and Christopher Yaluma respectively to amend the mining royalties, and in the interim, the 2014 tax system prevailed.
Glencore, Barrick Gold Corporation, Vedanta Resources and Canada’s First Quantum Minerals are some of the foreign firms managing mines in the country.
Meanwhile, President Lungu is confident that the authorities in South Africa will contain the xenophobic attacks which have claimed more than seven lives so far.
Mr Lungu has continued to consult with President Robert Mugabe in his capacity as chairperson for both Southern African Development Commun and African Union and the Government of South Africa.
Mr Mwale said that Cabinet also deliberated on the current xenophobic attacks.
Mr Mwale assured the public that the welfare of Zambians living in and traveling to South Africa remains one of the top priorities during this period.
“The Zambian mission in Pretoria continues to closely monitor the situation in South Africa and to date, no Zambian national living in South Africa has been reported to have been victim of these unfortunate attacks,” Mr Mwale said.