Zambia Defers Collection of 25 Per Cent Windfall Tax From Mining Firms

Text of report by state-owned national newspaper Zambia Daily Mail website on 10 September

[Report by Kangwa Mulenga: "State Defers 25 per cent Mine Tax Collection"]

Govenrment has deferred the collection of the 25 per cent windfall tax from mining companies until the discussions which have commenced between the two parties are completed.

Secretary to the Treasury Evans Chibiliti revealed this in Lusaka yesterday when he appeared before the parliamentary committee on estimates chaired by Itezhi Tezhi member of Parliament, Godfrey Beene.

Mr Chibiliti said only two mining companies had so far paid the 25 per cent windfall tax out of the total number of mining companies operating in Zambia.

“The mining companies made presentations to the late President Mwanawasa on the windfall tax and he asked Minister of Finance and National Planning Ng’andu Magande to review it so we have deferred the windfall tax until a proper assessment is done by the Zambia Revenue Authority,” he said.

Mr Chibiliti, however, said the deferring of the windfall did not mean that Government had cancelled what the mining companies owed the State.

He said ZRA would treat mining companies that have not yet paid the tax as defaulters until a comprehensive report was compiled by ZRA.

“The mining companies have cited failure to pay windfall tax to high production costs and as Government we are mindful of the impact the high production costs have had on the growth of the mines.

This is the reason we have engaged them into dialogue,” Mr Chibiliti said.

He said the three thresholds at which Government had calculated the collection of windfall tax had increased three times than earlier expected thereby causing difficulties to the growth of the mine sector in the country.

“These need to be reviewed because the President’s stance was to save the growth of the country’s mining sector. Otherwise, the law is still in place for payment of this windfall tax,” Mr Chibiliti said.

He said some mining companies had paid the tax under protest and that they have since assured Government of legal implications should the assessment turn to be in their favour.

Mr Chibiliti said Government had since referred some of the legal issues to the Attorney General Mumba Malila for further advice.

And Mr Chibiliti informed the committee that the K109.4 billion [kwacha] collected from the new mineral royalties would not be used until Cabinet and Parliament approved the usage of the additional revenue collected.

He said the money, which ZRA collected had since been deposited in a special account at Bank of Zambia (BOZ) mining revenue holding account number 99.

Mr Chibiliti said Government had since set up a committee, which travelled to Norway and South Africa to consult on how such revenue could be utilised.

“We are consulting our colleagues from other countries so that we can avoid adverse impact on our economy if we just offloaded such colossal amount of money into the economy,” he said.

And ZRA Commissioner General Chriticles Mwansa said the assessment on windfall tax would be carried out at the end of the year.

“For us the law is still in place and we shall collect what belongs to the Republic of Zambia,” Mr Mwansa said.

ZRA has since set up a specialised unit to handle the collection of new mine taxes.

Mr Mwansa said the staff in the unit recently visited South Africa to learn how that country was managing to handle the collection of mine taxes under a scenario Zambia was facing.

Originally published by Zambia Daily Mail website, Lusaka, in English 10 Sep 08.

(c) 2008 BBC Monitoring Africa. Provided by ProQuest LLC. All rights Reserved.