THE government has approved the drafting of a new tax regime in mining sector it hopes will help bring investment into the cash-starved sector and plans to overhaul the country’s income tax laws as well, finance minister Patrick Chinamasa said on Monday.
Zimbabwe became one of the most expensive countries to mine, with an estimated 60 percent of every dollar earned in revenue going to government after a shock levy hike in 2012 which saw some fees going up by as much as 5,000 percent.
Under the existing laws, mining companies pay unit taxes to district councils, a number of taxes to different statutory bodies such as the Environmental Management Agency, Radiation Authority of Zimbabwe and Zimbabwe Revenue Authority.
Chinamasa has previously indicated that government would offer incentives such as lower taxes or royalties to companies willing to add value to local minerals.
Mining has overtaken agriculture as the key driver of Zimbabwe’s economy, accounting for nearly 60 percent of exports.
Chinamasa told a press briefing after the announcement of new Zimbabwe Revenue Authority board that Cabinet had approved the drafting of the new laws.
“Treasury is working on two pieces of legislation. A mining fiscal tax regime – we want to come up with new mining tax regime and I’m happy to announce that the principles of the legislation were approved by Cabinet last Tuesday,” Chinamasa said.
“I want to come up with a mining tax regime that is fair to everyone- to the state and to the investor that brings about a win-win outcome. I believe we do not have one right now.
“I also want it to be simple and straight forward. At the moment it’s a very complex legislation which makes it very difficult to administer.”
He said treasury would also revise the Income Tax Bill after President Robert Mugabe declined to sign the one that was passed by Parliament into law after concerns were raised.