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Mines must honour mineral royalty tax

PRESIDENT Edgar Lungu should be commended for ensuring that the mining sector has a stable fiscal policy to continue on its robust growth.
Zambia has changed the mining fiscal policy a number of times in eight years, which mines say contributed to turbulence in the sector on which the country largely depends for forex.
In 2012, Government raised mineral royalty tax to 20 percent, which faced resistance from the mining companies.
However, when Mr Lungu assumed office in 2015, he moved very quickly and boldly to resolve the impasse with the mining sector.
Cabinet, on its sitting of Monday, April 20, 2015, announced changes to the mineral royalty by reducing the tax from 20 percent to nine for open-pit mines and six percent for underground mines.
This was in appreciation of the challenges mines were facing, especially in the face of fallen commodity prices on the international market. It was also meant to boost the sector, whose outlook was bleak.
Mining companies have also been victims of exchange losses in view of the volatility of the Kwacha. Thankfully, the Kwacha has been stable for more than a year now.
Government continued engaging the mining sector and came up with mineral royalty on sliding scale based on the price of copper on the London Metal Exchange.
This gesture was widely welcomed by mining companies.
Therefore, revelations by the 2015 Auditor General’s (AG) report that mineral royalty tax in amounts totalling K200,205,123 for the period January to November 2015 have not been paid to Zambia Revenue Authority (ZRA) as at September 2016 need to be investigated.
The recently published report for the financial year ended December 3, 2015 states that this is contrary to the provisions of the Act.
The report states that mining firms are expected to submit monthly mineral royalty returns, which stipulate royalties payable in accordance with the Mines and Minerals Act.
“The mineral royalty returns accompanied by the payment of the taxes due should be submitted by the 14th of the following month after the sales,” the report reads in part.
However, this report may not take into account the dispute mines had with ZRA regarding the mineral royalty tax.
The mining sector also has grievances with ZRA regarding the withholding of the value added tax which has not been refunded. But this should never be the reason for the mines not to meet their tax obligations.
Dialogue between mines, the chamber on one hand and Government must continue because the K200 million owed by the mining sector is needed to develop the country.
With the mineral royal tax having been substantially reduced in 2015, there should be no reason why the mines should default.
We clearly understand the critical role mines play in economic development much as we know that they must meet their statutory obligations, as good corporate citizens.
The PF government has done all there is to ensure that mines thrive but there seems to be no reciprocal action from this goose that surely lays the country’s economic golden egg.
It is in public domain that mines make super profits. In addition, Government has made huge compromises, particularly on mineral royalty tax.
Mines should not, therefore, withhold money which Government needs to meet the various socio-economic needs of its 15 million citizens.
Investment in agriculture, which the government intends to make the economic mainstay, and social sectors need the K200 million mines have not released.