Mining firms in Zambia have called for a fair tax system that will create an environment that will see both government and the mines benefiting from mining companies tax.
The Chamber of Mines of Zambia (CMZ), an umbrella body of all bid foreign firms operating in Zambia, believes that tax system for the mines must be in recognition of the nature of the sector because it takes time for mines to start making profits.
The organization's general manager Frederick Bantubonse said mining has a life cycle that starts with exploration, ascertaining size of the ore body, reserves and metrological process to be used before producing a bankable document. "Income tax law is clear. If a company spends eight years constructing a mine, you are not expected to pay tax in the ninth year because you will have just started production. There are carryover losses brought about by low metal prices.It takes a bit of time from production to when you become tax liable," he was quoted as saying by the Zambia Daily Mail on Monday.
There has been controversy over the mines' contribution to the country's economy with many stakeholders calling for the re- introduction of windfall tax. But the new government, which had campaigned on the premise that it will reintroduce the tax reneged instead doubling the mineral royalty tax from three percent to six percent. The mining sector only contributes nine percent to the country's gross domestic product (GDP) and only three percent in terms of tax.