Business Headlines

State acts to avert tax evasion

KALONDE NYATI, Lusaka
VARIOUS stakeholders have hailed the restructuring of the mining fiscal regime with renowned economist Oliver Saasa saying the move will mitigate possible tax evasion.
In the 2015 national budget, Zambia will redesign the mining fiscal regime by replacing the current two-tier system with a simplified system which will make underground and open cast mining operations pay eight percent and 20 percent mineral royalty tax respectively, resulting in a revenue generation of about K1.7 billion.
Mining firms will also pay 30 percent corporate income tax on income earned from processing of purchased mineral ores, concentrates and other semi-processed minerals, currently taxed as income from mining operations.
Professor Saasa, who said the decision will enable mining companies pay tax based on production, described the development as ‘bold’ and that it will enhance productivity in mines.
“The idea is to make sure that those that evade tax do not [do so] because the bases of payment will be based on production,” he said.
He, however, said the tax regime will only be successful if closely monitored.
“The ability to collect taxes will be dependent on the ability to monitor how much has been produced,” he said.
Zambia Association of Chambers of Commerce and Industry (ZACCI) president Geoffrey Sakulanda hailed the tax regime, saying it will enable Government improve its revenue collection from the mining sector.
Lunte member of Parliament and former Minister of Commerce, Trade and Industry Felix Mutati said the viability of the mining fiscal tax regime requires thorough assessment as failure to do so may have a negative impact on the sector.
“We are probably the first country to implement such a tax system and the impact this will have on mining companies is yet to be assessed. Windfall tax failed because it was not properly researched,” he said.
Mr Mutati also said failure to address issues surrounding VAT Rule 18 will have an adverse impact on the mining sector.

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