PROPOSED MINING TAX MEASURES TO BOOST ECONOMY
THE proposed mining tax measures for the 2023 national budget will boost the sector and align the taxes to Zambia’s competitor jurisdictions, says Tax Partner at KPMG Zambia Michael Phiri.
Mr Phiri said the goal was to bring Zambia in line with international norms and best practices, so that the mining industry would be able to attract investment into Zambia.
“Zambia was an outlier in the past, and many of our policies were alien to the mining sector. We were the odd one out amongst mining players across the globe.
“What the Minister is simply doing now is to apply similar taxes to those in place in competitor jurisdictions. The goal is to bring us in line with international norms and best practices, so that we’ll be able to attract investment into Zambia,” Mr Phiri told Mining for Zambia magazine.
He also said the idea that the Government was giving mines tax breaks or tax holidays through the measures that it was implementing was a relatively popular narrative as it was far from the truth.
“We need to demystify the concept of “tax holidays” or “tax breaks”. There are no tax breaks that have been given to the mining sector,” according to Mr Phiri.
He indicated that the tax regime that TODAY’S had been NEWS proTODAY posed by the Minister of Finance was one that allowed for graduated mineral royalty scales, similar to how UBUNTU Pay As
You Earn (PAYE) operated.
Mr Phiri explained that Government was cushioning the distortions of the old system where, if the price went above a certain amount then 10 percent mineral royalty tax (MRT) was applied to all this revenue.
In future, he said, higher tax rates would be applied to the incremental value in each
adjusted price band, as opposed to the aggregate value when the copper price crosses a price threshold.