CAPE TOWN – 11TH FEBRUARY, 2015 – GOVERNMENT has urged mining companies in Zambia to be transparent and engage government in meaningful dialogue if they had concerns with the recently introduced tax system.
Commerce, Trade and Industry Minister, Mrs. Margaret Mwanakatwe made the call on Tuesday pointing out that Government has foregone the 30 per cent corporate tax and replaced it with a mineral royalty tax system in order to make the arrangement predictable and easier to administer by both Government and the investors.
Mrs. Mwanakatwe said it was regrettable that in the history of Corporate Tax in Zambia, only two copper mines complied with this system and that Government was now aiming at improving mutual trust with the mining industry through the new one-tier tax system.
The Minister was speaking when she made a presentation during the African Mining Ministerial Forum at the 2015 Mining Indaba being held in Cape Town, South Africa. The event is an annual professional conference dedicated to the capitalisation of development of mining interests in Africa. It is said to currently be the world’s largest mining investment networking platform.
Mrs. Mwanakatwe said Government was committed to dialogue with the mines and expected mining houses to be transparent in order to foster meaningful discourse.
Mrs. Mwanakatwe pointed out that there was growing discontent in the developing world that citizens were not deriving a fair share from mineral exploitation and that this has put pressure on Governments to address the concerns.
She said the role of Government remained that of ensuring an enabling environment for the development of a vibrant and orderly mining industry which contributed to the economic development of Zambia.
“The new tax measures should be seen in this light. We are a well-meaning Government, striving to be transparent and open to dialogue. We are open for business and all well-meaning investors are welcome to Zambia,” Mrs. Mwanakatwe said.
She noted that objection to the new tax system by some players has been fueled by the fact that it was coming at a time when copper prices have gone down recalling a few years back, when copper prices had gone as low as US$2, 500 per ton but mining companies still remained in business.
“It will be important and fair for mining companies to look at what they are making before condemning Government’s decision to introduce the royalty tax system. However, we are open to dialogue,with all those who can prove that they are having genuine challenges to meet their tax obligations, ” She said.
Mrs. Mwanakatwe also told the gathering that Government has continued to dialogue with mine companies which have indicated that they had issues with the VAT Rule 18 which regulated Value Added Tax refunds. She said all mining houses that had complied with the rules have had their VAT refunded.
The minister further disclosed that Zambia’s Mines and Minerals Development Act, Number 7 of 2008 was being reviewed in order to ensure a balance that will create a competitive, thriving and sustainable mining industry that benefitted Zambians while rewarding investors.
The revision is also expected to address the unnecessary bureaucracy in the issuance of mining rights; the inadequate area and duration of prospecting licences; inadequate tenure of mineral processing licences; restriction on small-scale mines ownership, and the lack of provisions to retain a tenement in situations where progression to mine development becomes impossible due to adverse economic conditions or technological constraints.
Mrs. Mwanakatwe said Zambia was looking at value addition at two levels with the first one being that of increased capacity to process mineral products and secondly, to exploit the vast opportunities of utilising mineral resources in creating an industrial base for the manufacturing sector.
She said Government was also focusing on gas and oil exploration, and that nine licences were recently granted to successful bidders.
Mrs. Mwanakatwe has, on the sidelines of the Mining Indaba which runs until 12th February, 2015, also held various meetings with potential investors as well as interviews with international media organisations during which she has marketed Zambia’s investment opportunities and used the chance to clarify the new mining tax regime.
Issued by:
Nicky Shabolyo
Press Secretary
High Commission of Zambia – PRETORIA SOUTH AFRICA
nshabolyo@gmail.com/press@zambiapretoria.net