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Civil society organizations oppose Zambia's revised mineral royalty tax

Xinhua, May 18, 2016 Adjust font size:

A consortium of civil society organizations on Tuesday opposed amendments to the country's mine tax regime which has introduced a sliding mineral royalty tax band which will vary depending on the price of copper on the international market.

Parliament passed the amended law which has pegged the mineral royalty tax band between three percent and six percent as the floor and ceiling tax rates.

But the consortium has asked the government not to implement the proposed mineral royalty tax bands as they were created after pressure from mining firms.

"We civil society organizations wish to firmly register our concern on the proposed tax bands for the new sliding mineral royalty tax regime. Although cognizant that the move toward the sliding mineral royalty tax is progressive and will ensure stability in the mining sector, we wish to express displeasure at the current proposed three percent and six percent bands as the floor and ceiling tax rates pegged to the value of the mineral on the London Metal Stock exchange," the Zambia Tax Platform and Publish What You Pay campaign said in a statement.

The consortium said this was a raw deal for the country as mineral resources were finite and that the country needed to make the most out of its mineral resources.

"Our position is that the proposed tax bands are investor-led and do not seek to maximize possible revenue collection in mining booms. We are of the understanding that the initial proposal for the sliding mineral royalty tax band as of January was four percent to nine percent, however government has settled for a retrogressive tax band," the statement added.

This new regime will surely compromise mineral revenue collection below what was effected in the 2015 Mines and Minerals Act, it added.

But the mining firms have welcomed the new tax regime, saying it will bear fruits in the industry.

Last Friday, President Edgar Lungu said the country now has a predictable, consistent and flexible mining tax regime which has been agreed upon with all stakeholders and will not require any changes in the foreseeable future. Endit