Zambian bankers applaud new mining tax structure
Zambia recently set its royalty tax rate for open cast and underground mining at 9 percent, a downward revision from the earlier planned rate of 20 percent. This move has been applauded not only by key foreign investors, but by the Bankers Association of Zambia (BAZ). The association believes it will help instill trust and confidence in the Zambian economy.
“The reversal of the 2015 mineral tax brings relief to the mining tax impasse, especially that this immediately follows relaxed rules on VAT rule 18 and we hope this turns a new chapter and brings back trust and confidence between the Government and the Mining sector,” said Mr Mwanza, CEO of the BAZ. “As a sector, our view is that fiscal issues must be given an equal weighting in addressing economic challenges as opposed to reliance on monetary policies alone to ensure economic fundamentals were evenly balanced in the market,” he added, indicating the association’s dissatisfaction with the current imbalances.
The association urged mining companies to unlock their investment muscle as the contentious issues regarding taxation had been addressed.
In a bid to boost revenue from its mining sector, Zambia had earlier planned to increase royalties for open pit mines to 20 percent, from an initial 6 percent. Underground mines were to be slightly increased to 8 percent. The reaction to this was overwhelmingly negative as the country’s chamber of mining warned that it could cost the country $7 billion in output over the next half-decade as well as an estimated job loss pegged at 12,000.
The move also aggravated unions, miners, and investors, who threatened to pull out of the country.