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Zambian gov't sticks to controversial mineral tax regime

Xinhua, January 14, 2015 Adjust font size:

The Zambian government said the new mineral royalty tax was final and that it will not rescind it, the Zambia Daily Mail reported on Wednesday.

The 2015 national budget has seen a change to the country's mining tax regime which has seen the increase in mineral royalty taxes from 6 percent to 8 percent for underground mines, and to 20 percent for open pit mines, a move that has vexed mining firms, with some threatening to halt operations.

But Minister of Finance Alexander Chikwanda said the new mineral tax regime was a fair route and makes its simple for the country's tax revenue authority and the mines to plan.

"The new mining taxation structure is final. We changed from the corporate tax because it was elusory and only two companies paid," he was quoted as saying by the paper.

According to the minister, the administration of the mining taxation has been left for the tax authority, the Zambia Revenue Authority (ZRA), and that the government will not give the tax authority instructions on how to implement it.

The change of the tax regime has angered mining firms who feel it will increase operational costs and have called on the government to review it. Others have announced plans to suspend operations or withhold new investments.

Last year, Canadian-based mining giant, Barrick Gold Corporation, announced plans to initiate a process of suspending operations at its unit in Zambia following the government's decision to approve the budget which contains the controversial new tax regime.

The Toronto-headquartered mining giant, which runs Lumwana Copper Mine in northwestern Zambia, said the introduction of the new mineral royalty has left it with no option but to initiate the process of suspending operations to reduce costs. Endi