Tax hike to hurt cop­per pro­duc­tion:- BMI Re­search...

Zambian Business Times - - FRONT PAGE -

The 2019 bud­get pre­sented on 28 Septem­ber by the Zam­bian Min­istry of Fi­nance gen­er­ated a wave of crit­i­cism among min­ing investors as the gov­ern­ment looks to sig­nif­i­cantly expand and in­crease taxes on min­ing com­pa­nies op­er­at­ing in the coun­try. The aus­ter­ity mea­sures were mainly pred­i­cated on the gov­ern­ment’s greater com­mit­ment to slow the ac­cu­mu­la­tion of new debt in a bid to re­as­sure investors af­ter the kwacha de­pre­ci­ated by 23.8% in the month of Septem­ber (see ‘Quick View: Kwacha Sell- Off In­creases Risks for Zam­bia’s Macroe­co­nomic Sta­bil­ity’, Septem­ber 18). How­ever, the de­ci­sion is likely to bring about only tem­po­rary relief, as eco­nomic growth prospects are damp­ened in the longer term due to a slowdown in cop­per pro­duc­tion.

The main re­forms pro­posed are as fol­lows: In­crease in min­eral roy­alty tax by 1.5% across the dif­fer­ent price bands, min­eral roy­alty tax non-de­ductible against cor­po­rate in­come tax, rein­tro­duc­tion of sales tax in lieu of value added tax, in­tro­duc­tion of a 15.0% duty on man­ganese ores and con­cen­trates ex­ports, in­tro­duc­tion of 15.0% duty on gold and pre­cious stones ex­ports, in­tro­duc­tion of a 5.0% im­port duty on cop­per and cobalt con­cen­trates, restrictio­n of tax for in­ter­est at 30.0% of earnings be­fore tax, in­ter­est and amor­ti­za­tion (EBITDA).

Re­duced Cop­per Pro­duc­tion Will Weigh On Growth Zam­bia - Cop­per Pro­duc­tion, % y-o-y [LHS] And Real GDP Growth [RHS] e/f = Fitch So­lu­tions es­ti­mate/forecast. Source: Na­tional Sources, Fitch So­lu­tions

A miner at Kagems emer­ald mine in Lufwanyama

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