PSDA decries new reduced mineral royalty tax


By Nation Reporter

MAINTAINING Mineral Royalty Taxes (MRT) between 3 percent and 6 percent will result in Government collecting very little tax from the mining industry, says the Private Sector Development Association (PSDA). 

PSDA chairperson Yusuf Dodia said in an interview that implementing the new MRT would result in Government collecting less revenue from the mines as they paid very little corporate taxes while keeping the export earnings outside Zambia.

“It is evident that maintaining mineral royalty taxes between 3 percent and 6 percent will mean that Government will receive very low tax revenue from the mining industry.

“Given that the mines pay very little corporate taxes the mines keep the export earnings outside Zambia and the mines do not pay VAT; the only mining tax revenue open to Government is mineral royalty taxes,” he said.

Mr Dodia said the 3 percent to 6 percent taxation may not be in the best interest of Zambia.

But Zambia Chamber of Mines (ZCM) says the new proposed changes to the MRT regime would enhance the collection of mineral revenue by the Government rather than compromise it.

ZCM president Nathan Chishimba said the new proposed MRT regime recognised the need to balance increased tax revenue with continued employment and investment in new mining ventures.

“One cannot separate mining tax revenue from mining investment because it is the mining investment which ultimately produces the tax revenue. A good tax is one which balances these two competing objectives,” he said.

The two were reacting to a statement issued by a consortium of civil society organisations advising Government not to implement the new proposed MRT regime on the grounds that it was “investor-led” and would “not maximize revenue in times of commodity price booms”.