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Zambian president intervenes in controversial mining tax law

Xinhua, February 4, 2015 Adjust font size:

Zambian President Edgar Lungu on Tuesday directed the head of the country's tax revenue agency to expedite dialogue with mining firms and resolve a controversial mining tax law that threatens to scuttle investments in the country's mining industry.

The Zambian leader issued the directive after holding a special session of cabinet to consider the impasse over the new mining tax law and outstanding value added tax (VAT) refunds for mining firms, according to a statement released by presidential spokesperson Amos Chanda.

The Zambian leader said he wanted an amicable settlement that must end a win-win outcome for both the mining companies and the people of Zambia.

"I want to see increased dialogue and increased flow of information that in fact we have been talking to the mine owners over these matters. We have to make this clear so that we can forestall the falsehoods that some people are peddling to poison public perception regarding this matter. The ultimate aim is to protect jobs and keeps mines profitable at the same time. We must maintain the country's right to collect due taxes," he said.

The Zambian government has introduced a new tax regime in the 2015 national budget which has incensed mining firms with some threatening to pull out or to cut down on their production.

The new tax regime 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.

Meanwhile, the Zambian leader has directed relevant ministries to institute negotiations of VAT refund claims by mining firms.

He said negotiations should be instituted to address mechanism under which any payments would be settled.

Controversy has arisen over VAT refund claims by mining firms when the government introduced new laws that the firms should submit documents from importing countries in order to claim the refunds, a move disputed by the mines.

The government has since withheld VAT refunds totaling 595 million U.S. dollars since July last year. Endi