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Zambian government sets mine tax royalty to 9 percent

USAKA (Reuters) – Zambia has set the royalty tax rate for open cast and underground mining at 9 percent, the government said on Monday, rowing back from earlier plans to charge as much as 20 percent.

Zambia’s decision to increase royalties for open pit mines to 20 percent from 6 percent and those for underground mines to 8 percent from 6 percent in January had rattled unions and miners, forcing the government to review the plan.

Some mining firms and Zambia’s chamber of mining warned of shaft closures, and the loss of about 12,000 jobs.

Africa’s second-largest copper producer said it will also charge corporate income tax on mining operations at 30 percent, while mineral processing will attract a tax of 35 percent when the law takes effect on July 1.

The cabinet also approved a 15 percent variable profit tax on income when taxable earnings exceed 8 percent of gross sales, while claims of losses will be limited to 50 percent.

Officials said some mines would claim to have incurred losses for a prolonged period, and therefore did not pay any tax.

The taxes are however yet to be approved by parliament but it is expected they would receive the assembly’s backing.

The cabinet said the taxation regime will bring stability and transparency in the mining sector.

“Zambia Revenue Authority will introduce stringent enforcement mechanisms to effectively monitor mining activities and ensure greater transparency among mining companies when reporting revenue and expenditure,” the statement issued by acting chief government spokesman, Vincent Mwale said.

Some of the foreign firms running mines in Zambia include Glencore, Barrick Gold Corp, Vedanta Resources and Canada’s First Quantum Minerals.


Source – Reuters Africa