The government plans to raise mineral royalties and corporate taxes in June after renegotiating agreements signed with foreign mining companies, Finance Minister Ng’andu Magande said on Wednesday.
Magande told Reuters the government had informed foreign copper and cobalt mining companies it intended to raise mineral royalty tax to three percent from 0.6 percent and corporate tax to 30 percent from 25 percent.
The government was currently working out detailed proposals and would start renegotiating agreements in order to raise corporate and mineral royalty taxes, he said.
“We would like to start renegotiating the development agreements to raise tax in June and complete the exercise the same month. There are only five items we are looking at,” Magande added.
Magande said foreign firms which purchased copper mines starting from 2000 had been awarded tax breaks to enable them to stabilise their operations at a time of low prices.
“The tax breaks were only for the stability period and now they should all start paying the same taxes. The new mines are already paying 30 percent corporate tax and three (percent) mineral royalty tax,” Magande said.
He said the government would renegotiate with 10 foreign mining firms that had received tax incentives so that they could contribute more funds to the Treasury.
I hope this should be one of the measures we should put in place to avoid borrowing especially after reaching the HIPIC completion point. Please guys can some one advise Mangande and Levy that we dont need to borrow we should try to use the resources that we have and the money we can generate as a nation. Angola and Sudan have done away with donnors and they are doing paerfeclty well if you look at theire respectve annual economic growth rates. No that we can compare with them resource wise, we have to start from some where, if we can reach a point were we stop paying back loans then economic growth will be real and meaning not were by only a few can feel it.
It is not propoper Danny to comapre Zambia to Sudana and Angola.Angola is richer in reources than Zambia, it has Oils and Diamonds which are top notch resources with a high value on the market. Sudan too is benefitting from its oil. Zambia is always rising from the ashes. Its true the Government should not revert to heavy borrowing. I would have loved the Mineral royalties to be 10% so that all Zambians should reap off from the sales of Copper, only then can we stop relying on Donors fro projects. malawi is even trying as it constructs some Roads using its own resources, this should be encouraged in Zambia.
Levy and Magande need to ask UK about windfall taxes and how UK has greatly benefited from these taxes,increased social spending,raising the high expectancy life to 92 when ours is wobbling around 37.
These are some of the clauses they should have put in place when selling the mines and other profitable ventures.Zambia has an Economic Think Tank Task force which ideally is supposed to be a research based organisation,what it does in its own wisdom or lack of it heaven knows.Partriotism is what we need today ,to bring every coin and knowledge into mainstream and stop borrowing.We are tired of seeing our govt always in the streets with a begging bow.
The fact that our govt doesnot want to ask they never learn.Today Venezuela is threatening to leave IMF/World Bank for one obvious reason they have not seen any tangible benefits belonging to such organisation and are opting to concentrate on home grown policies.Its a shame
Sorry to say the truth, Ng’andu Magande and your fellow chaps are *****s. So, all along these mine raiders have been paying mineral royalty tax at 0.6%? Sounds like a joke, surely minerals mined from our motherland, toiled by our brothers to mine them and then you Magande and co give them freely? May be that explains alot why the foolish MMD govt doesnt even care about safety of miners whose lives bear price tag in the hands of these raiders. The corporate tax at 30% is still a derision once you take into conderation of the inputs and outputs. Magande, learn to consult before you make an inexcusable decision. Indeed, these thugs are busy making abnormal profits before the resources get exhausted and leave us with nothing and become part of history. Of course, it’s a bitter pill to swallow when sensitive positions are managed by inexperience chaps whose roots are attached to plot 1.
Atleast they are paying a percentage. The biggest mistake was to give these so-called “conglomerates” and foreign investors tax incentives, in the name of welcoming investor’s. Never heard of a place in this world where a business in a profit generating market has never paid taxes. George, the Scandinavian countries only have timber to boast of and they are more developed than those countries with minerals and resources in Africa. How do you compare that? In my opinion, Intellectual capital is more important than all those minerals and whatever’s which are just adding more misery to the people. The politician’s do not steal money from the tax collected,as it has been already accounted for, they steal money from the donor funds through manipulation of figures for projects and the like.
Kayata, atleast they are paying a percentage sounds appalling when you think of 0.6% which is equally nothing as mineral royalty tax which in actual sense can be atleast 10% and corporate tax to be about 45%. These investors came with nothing and all they are using belong to Zambia starting from labour up to machinery. Really, you expect them to pay a ridicule percentage? May be there is a hidden percentage Levy is getting, who knows. KK used to manipulate funds from ZCCM, FTJ was good at confusing fitures of ZANACO funds and Levy is possibly a beneficiary of investors, he seems to be clean but his hands are filthy.
Sam, i agree with you that 0.6% is nothing, but those investors FTJ brought paid not even 0%, despite it though some brought gods into the undergrounds of the mines to maximise profits, you know those indians at Ramcoz,with KK he brought them too and gave them abandant land in central province and created Heaven on Earth. In Canada, the percentage of Crown royalties and mining taxes is 100%, and corporate taxes are 21%. When FTJ came to power,he copied the Canadian budget which Kasonde presented,but why he brought in tax incentives is another big question mark. I think only Anglo-America has been the geniune investor in Zambia,except that Chiluba and Mazoka,when Andy was still in MMD, agreed to give Anglo a 5 year no tax enjoyment.i’ll disagree that Levy is clean, because to me NO lawyer has clean hands. Remember why KK sacked him as SG, and how he was defending those crooked Senegalese in courts.To me,there are no honest lawyers.To be both an honest man and a lawyer, that’s Impossible
They were given tax incentives because our mining industry was on the verge of death..Now they are up and running and making good profits it is only right that the government renegotiate new rates. If they are not happy then let them leave…they are others who will come in and take over.
We are selling our country by allowing these outside companies to pay such an amount in taxes. 0.6% is an insult to the zambian people. What is happenng is that there could be a parallel economy set up by these minig companies and before long they will start dictating what happens in goverment. RAISE THAT TAX AND LET THEM PAY
Zababa, the mining industry was on the verge of death because of mismanagement, and that’s why privatisation has revived it.
Kayata, in 1981 RCM and NCM merged as ZCM that later became ZCCM and that instigated KK to start manipulating the funds to suit his desires. I guess you do recall in 1986 when Kavindele was suspended by KK when he made a qery over the exhange of copper for 50 Japanese vans to be used by then the supreme party UNIP at branch and ward levels. During those years Mufulira, Konkola and Nchanga mines had their peak of production but when Kafupi came into power, he started making dreadful experiments by apply privitisation he didnt understand properly of which I still believe was not and is still not a prime solution to mines but good management.
Kayata, in a nut shell,privitisation is an insult to the Zambians as though they dont know how to make profit from their on resources and accept whatever ‘muzungo’ says especially from IMF and WB. Trully,we can manage our own mines and provide maximun safety to our workers.
Kayata my brother, do some research on the mining industries in Zambia. ZCCM was not at the verge of collapse. That was the picture the Kafupi Administration painted in order to justify selling the mines. The problem was not with the Mines but the government of thieves we elected in power whose sole intent was to defraud the Zambian People. I have told you guys I don’t see anyone thinking in MMD. How do you charge a mining company 0.6% and you charge a civil servant who gets less than K1M 25%. Mr Magande’s tax base expansion involves taxing marketers and street venders. If the mines and the so called foreign investors are taxed accordingly. Zambian workers would be paying less that 5% tax. But we are cursed with morons to make policy.
Look at the sale of ZANACO. If the government wanted to sale its share they should have gone to Luse or Cavmont to offload their shares. But NOOOOOOOOOOOOOOO they have to empower the foreigners first. And let the foreigners exploit Zambians when they d
Kayata…I know…I worked for the mines and saw it all first hand
Gents can I be candid without upsetting anyone here???..Corruption is worldwide problem..the difference with the western world is the people in charge will steal 2% and the company will still thrive on 98%..In africa the guys will steal 98% and expect the company to thrive on 2%..and when it doesnt it is the west’s fault!!!..
Another comment I would like to add is would any one of us not take the oppertuinty to do the same thing our politicians are doing if we were in their shoes???..be honest before replying!!!
Sage your comments are valid.Mr Magade should also improve on the collection of revenue by reducing the number of cash boxes. He must put in place a system that will reduce corruption by encouraging payments of all the public to be paid to ZRA and then people getting services should use the receipt from ZRA to get the desired services from other organizations. This will help to improve the collection of public funds and reduce corruption.
Sam, The KK and FTJ govt’s mismanaged the resources and if you look at the entire govt companies, they were abused by the administration, from ZCBC to ZA. Anything in Govt hands is always abused by people because of the attitude that this is for the people and am the people. Parastatals depend on govt subsidies, and thats why when they make losses they are not worried. You mentioned that privatisation is an insult to the public, if all the companies were privately managed, do you think there was going to be mismanagement? And why do we always keep going to IMF and WB? LPM just went to China, for begging mission’s.Because the Govt has no money, and like every financial institutions, they have to dictate terms to every loan. So i think the best is the Govt to stop going to IMF & WB for loans. We lack intellectual capital in Zambia,and combined with greed we are doomed. Scandinavians are more developed than the whole Africa,but they dont have mines and natural resources,apart from timber.
Brother Sage, The main problem is the govt has no revenue to service the economy.I agree with you on the sale of Zanaco shares.The other problem too, is the govt has no vision, you know beggars have no vision, because thats what Zambia is now. I have always blamed the Govt for it’s policies and not the foreign investors because the foreign investors are just grabbing the opportunity just like any other person would do. And since the govt has little revenue source, they are squeezing the little the employees earn, the entire industry has collapsed in Zambia, and the govt is supposed to help local businesses develop so it could create employment that would bring enough tax revenue, and would lower the tax rate. But we are seeing the opposite. We again lack innovation.
Kayata,Privatisation as a policy is not bad as perceived but if wrongly done has serious negative repurcussions like Zambia is in today.Everything we sold went for a melody why?We didnot have any idea of what we were doing and those that did like Penza were greedy lot, and this is where the IFI’s are viewed as evil,they prescribed quinine to a person suffering from toothache and this automatically sent the patient into coma.Zambia has to do alot to come out of this mess.Zanaco sale should have been adequately handled by Luse.Its like we never learn from the past mistakes.You cant sell 262 companies with no savings going to the Treasury?What does that mean?Corruption is the cause?HH is chairman on Sun Hotels the company he helped sell,Chitalu is Chairman of Zam Breweries a company he helped to sell, where are the checks and balances? We need a body of inquiry to bring out malpractices envisaging the sell of state firms and bring culprits to book.Our economic independence has been lost
No replies…I thought as much!!!!
Kayata, its better to work with expatriates than privitising companies.
My bro Kayata, the IMF and WB are the ones who brought these stupid terms VAT, SAP and privitisation to sequeeze third world countries.
I support Chilumba, Zababa and Sam in your last comments. Privatization as a policy is good but the means should have been under great scrutiny because it involved national wealth and interest. To pursue such enormous task of privatization without checks and balances is to say the least being myopic. More so because you are dealing with profit motivated international machinery that cares less on the welfare of locals. To go into such deals with absence of or conspiracy prone lawyers who could not either advice the system or became beneficiaries by keeping quiet is to say the least treason. To sign a deal with Anglo-America for Konkola without the inclusion of exit penalties is “treason!†No wonder people could strip off companies such as Kapiri Glass and walk away freely.
The sale of ZANACO is another bitter pill despite the rejection by majority. Now Zambia has allowed everyone to see their underwears and this will be without implications in the future. Every country has certain industries that it does protect and may give out some. Shoprite has pumped out millions of dollars from our system and seriously Zambians could have renovated those ZCBC shops. Empowering locals through management buy-outs should have been pursued and partnership with locals could have ensured equipping our citizens after all it is our wealth. Botswana may not be the best but we can learn a lesson from them on equipping their own. Zambia Airways’ demise was a gross mistake, Copperbelt Power Company, CPC’s sell that never made any losses a rip off, and ZESCO should not be given out! Wanted: New companies to compete with already established ones and capable of paying taxes, real taxes!
Right step, Let us develop our country from our own plans.
Sam,VAT is tax on exchanges.It is levied on the value added that results from each exchange.It differs from a sales tax which is more common in Zambia,because a sales tax is levied on the total value of the exchange.For this reason,a VAT is neutral with respect to the number of passages that there are between the producer and the final consumer.A VAT is an indirect tax,in that the tax is collected from someone other than the person who actually bears the cost of the tax (namely the seller rather than the consumer).To avoid double taxation on final consumption, exports(which by definition,are consumed abroad) are usually not subject to VAT and VAT charged under such circumstances is usually refundable. The VAT was invented by a French economist in 1954. In developed economies,it is the most important source of state finance, accounting for approximately 45% of state revenues.SAP is just some qualification for loans from WB, in Zambia since 1986’s
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