Choose Your Language Of Preference Below

French Version German Version Russian Version Spanish Version

Portuguese Version Chinese Version Arabic Version 

By Shapi Shacinda
LUSAKA, Jan 11 (Reuters) –
Zambia will introduce a windfall mining tax this year in a move it expects to generate $400 million in revenue, President Levy Mwanawasa said on Friday.
levy.jpgHe told parliament the new tax regime would effectively increase mining taxes to 47 percent from 31.7 percent.
Mwanawasa’s government has been pressured by unions over the past few years to spread the benefits of its copper wealth, the mainstay of its economy, to its citizens and workers in the industry who complained of poor wages.
Mwanawasa said the hike in taxes sought to address those concerns. “The new regime introduces a windfall tax and a variable profit tax that has been designed to work in periods of both high and low prices and for both high and low cost mining projects,” Mwanawasa told parliament, adding that the new system will start in the first three months of this year.
He blamed tax five to 20 years incentives awarded in recent years to firms for creating an imbalance in mineral wealth between the state and private sector.
Mwanawasa said Zambia in 2007 only collected $142 million in mineral royalty and company tax from earnings of $4.7 billion in copper and cobalt exports by foreign owners of its vast copper and cobalt mines, despite a 400 percent increase in global metals prices in the past seven years.
He added that foreign mining firms were expected to earn up $4 billion this year if metals prices kept at current levels. “Clearly, Zambia’s fiscal mining regime is extremely generous and provides the lowest revenues to the government. This to a large extent has been a source of public outcry,” Mwanawasa said.
Mwanawasa said additional resources from the new tax measures would enable mineral-rich Zambia to spend more on education and health and help achieve its aim to be a prosperous middle-income country by 2030.
Mwanawasa also said Zambia would introduce uniform tax measures for all foreign miners. “In view of this, there will no longer be any need for special agreements with investors in the mining sector and eventually all the sectors,” he added.
Mwanawasa said a new regulatory regime would be introduced to safeguard foreign investments in mining. “It will have a modern licensing system based on transparent procedures (and it) will provide for transparency in the accounting and utilization of mineral revenues,” Mwanawasa said.
Zambia has been in negotiations with mining companies since October last year about proposed increases in mineral royalties, corporate taxes and customs duties on imported equipment, as a way of boosting revenue from the sector. The copper mines are a major employer in this southern African country of 12 million people.
Source: Guardian Unlimited
(Reporting By Shapi Shacinda, Editing by Peter Blackburn)