THERE have been a number of challenges in implementing the 2015 mining tax regime, says Zambia Revenue Authority commissioner general Berlin Msiska.
And Msiska says there is an immoral aspect to tax avoidance, even if it might be said not to be illegal.
Msiska said in an interview that tax revenues from mines remained depressed as some mining companies failed to pay the single tier tax since it came in force on January 1.
“In terms of the overall [mine] tax, there have been quite a number of challenges in terms of performance. Some of the mining companies have utilised the opportunity to apply for deferment,” he said, but did not disclose the mines who have asked for a tax deferment, citing confidentiality clauses.
Msiska said ZRA would pursue mines asking for deferment of their tax obligations as a deferment did not amount to a “write off”.
“I must say the performance has not been up to expectations,” he said.
Government is on July 1 set to abolish charging mineral royalty tax at 20 per cent for open cast mines and eight per cent for underground mines and instead revert to the double tier taxation regime with corporate income tax from income earned from mining operations at 30 per cent.
In the current revision, open pit mines would pay mineral royalty tax at nine per cent and underground mines at six per cent.
And Msiska said the expected slowdown in economic growth seen at 5.8 per cent from seven per cent would hurt revenue targets as planned reduction in mineral royalty tax for mining companies meant reduced collection of domestic taxes.
“What happens is that the targets are set responding to economic activities in the base year [and] they are also set responding to the projections you are making as result of tax policy,” he said, adding that ZRA was waiting for Parliament to make a decision on the proposed changes to the mining tax.
And Msiska said the social impact in developing countries as a result of transfer pricing should be emphasised so that the morality of certain actions was questioned.
“I know people argue to say ‘tax avoidance is not illegal…’ but I think for us developing countries, even the tax avoidance, we should split it into two,” said Msiska when he officiated at the UN/African Tax Administration forum on transfer pricing. “There is one which is moral in nature and one which is just immoral…”