Miners toast revised mineral royalty tax


The principle of returning to a two-tier tax system for the mines will in the long run increase revenue to the Government coffers for social and economic development on a sustainable basis, says the Zambia Chamber of Mines president Jackson Sikamo.

And the miners have said Government’s decision to revise the mineral royalty tax will lead to increased Foreign Direct Investment and reduction of massive job losses in the mining industry.

Mr Sikamo said the revised mine tax regime would also promote investment in the mining sector for sustainability of the industry and security of direct, indirect and induced jobs.

Mr Sikamo was commenting on Government’s proposed changes to the 2015 mining regime that will see the tax rate on open cast mining and underground mining pegged at nine percent while corporate income tax on income earned from mining operations has been revised to 30 percent.

He said the announced changes followed “cordial and fruitful discussions” between the Government and operators.

Mr Sikamo however said the industry body was yet to form a position based on its members’ feedback.

He said the return of the two-tier tax system would also ensure predictability, stability, consistency and transparency to enable long term planning by the mining operators and potential new entrants into the industry.

The revision of the tax systems for the mines follows President Lungu’s instructions to Finance Minister Alexander Chikwanda and Mines Minister Christopher Yaluma to draft changes to the royalties.

The proposals that will only take effect on 1st July 2015 will result into K2.3 billion projected annual revenue loss from the mining sector but the loss would be mitigated by spending cuts in some sectors.

And the Mineworkers Union of Zambia (MUZ) general secretary Joseph Chewe has said government’s decision to revise the mineral royalty tax will lead to increased Foreign Direct Investment and reduction in massive job losses in the mining industry.

Mr Chewe said though the revised mineral royalty of nine per cent for both underground and open cast mines, together with the re-introduced corporate income tax on mining operations will translate into revenue losses in the region of K2.3billion, the measures were good to retain current jobs and promotion of new job creation. “Without this revision, we feel it could have led to reduced foreign direct investment and massive job losses.

With this move, the economy is set to receive increased foreign direct investment, protection of current jobs and promotion of new jobs from re-investment decisions by mining companies,” Mr Chewe said.

He said MUZ appreciated the directive by republican President Edgar Lungu and for his affirmative action to task the Minister of Finance Alexander Chikwanda and his counterpart at the Ministry of Mines Christopher Yaluma to work round the clock to revise the mineral royalty regime in the mining sector.

Mr Chewe said MUZ was sure that Parliament would approve the revised mineral royalty taxes set for implementation on July 1, 2015.

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