The Zambia Chamber of Mines has expressed concern with the revised mining tax regime in the 2015 budget and fears it will stifle growth in the industry which looks up for growth and increased copper output in the coming years.
The Chamber which is in the midst of seeking relief on Value Added Tax (VAT) being withheld in excess of US$600 million says it is concerned with the proposed new mining tax regime in the 2015 National Budget as it will affect capital investments in the sector.
Speaking during a post budget analysis in Lusaka on Oct. 11 Chamber President Jackson Sikamo, says the new law which seeks eight percent on mineral royalties on underground mining, 20 and 30 percent on corporate taxation due next year is too high and stifles mining operations as it is paid monthly even where no cash has been generated.
He has observed that mineral grades are becoming lower making mining more sophisticated.
Sikamo lamented that the outcome of the mineral value chain monitoring team appointed to probe mines is long overdue saying contrary to public perception, mining companies are not abrogating the payment of taxes to the treasury.
Sikamo added that mining companies are transparent, accountable and credible in their dealings. This comment stemmed from growing concerns from stakeholders that some mining firms are under declaring their profits, a situation the chamber has disputed.
He has since challenged anyone with information on any perceived wrong doings by mines to come out in the open. He made the challenge in Kitwe during a stakeholders meeting at Moba Hotel.
At the same occasion, KPMG Tax Director Michael Phiri appealed to government to dialogue with mines so that proposed tax measures do not suffocate capital investments.
Phiri, however welcomed government’s doubling of presumptive tax on public service vehicle operators and other customs measures meant to support the growth of the local manufacturing sector.
And former National Council for Construction Executive Director Sylvester Mashamba commended government for allocating a substantial amount to infrastructure development during the same discussion but however, expressed concern that a huge chunk of the money will leave the country because most contracts are given to foreign firms because of low capacity among local firms.
Furthermore, Economics Association of Zambia President Isaac Ngoma, emphasised the need for government to broaden its tax base and capture the informal sector as part of increasing revenue collection.
But Finance Minister Alexander Chikwanda who earlier in the day presented the K47 billion budget for the fiscal year 2015 expressed concern on the lack of meaningful participation by Zambians in the economy citing the mining and construction sectors which said are being dominated by foreigners.
Chikwanda further called for interaction between government and stakeholders. Government has been challenged to immediately release the findings of the recent audit conducted on mining firms.