Zambia’s mining tax rate highest in region
File:NCHANGA Mine rescure Team B Captain Jonathan Kolala inspects air underground during the Zambia Mine Rescure Association competetion at Namundwe Mine
FIRST Quantum Minerals (FQM) Limited says the tax rates applicable to the mining industry in Zambia are the highest globally.
Company head of tax Adam Little in an interview in Lusaka said FQM has from 2005 to date paid over K 9 trillion (US$ 2 billion) of taxes.
Of the total taxes paid, about K390 billion (US$ 84 million) is Pay As You Earn and K1.97 trillion (US$ 234 million) mineral royalties.
Mr Little said despite the high taxes and high cost environment, mining prospects in Zambia remain bright for as long as Government does not try to kill the golden goose laying the golden egg.
“When you combine high existing taxes and high cost of production, it’s a country people will think twice before investing,” he said.
He described windfall tax introduced in 2008 as the worst tax he has ever seen, adding that it was retrogressive as it was charged on revenue rather than profits.
Mr Little said had the windfall tax persisted, a number of mines would have shut down at the time copper prices were high.
“I understand why people are calling for it (windfall tax) because they see what looks like a healthy industry and they see a contribution from the industry which isn’t high enough,” he said.
He said some companies are paying lower tax than people expect due to huge investment following privatisation.
Mr Little said once a number of companies reach tax paying levels and copper prices on the international market improve, tax and mining profits are expected to improve.
He said there is need to also improve capacity and capability levels of the Zambia Revenue Authority to collect taxes from the mines.
“Government should encourage future development, I don’t think that means offering individual incentives to the mines “No sweetheart deals” but coming up with consistent and fair tax environment,” he said.
Mr Little said because of the huge investments involved in mining, it is prudent that tax rates are stabilised as was in the old development agreements.
He said to operate new mines, citing the Trident project that includes Sentinel, Enterprise and Intrepid copper projects, one has to be efficient to control costs.
“Any additional taxes will make the next generation of mines that run on slim margins of copper very hard to succeed,” he said.
Commenting on corporate social responsibility, Mr Little said FQM has been involved in upgrading of the local general hospital, Solwezi technical institute, upgrade of the Solwezi-Chingola road, sports development in Solwezi and was the major sponsor of the African Cup of Nations.
“As much as it is important that our corporate social programmes get through to the media, the big thing for us is tax contributions. Once the mines pay tax, the money is in the hands of Government and how it spends that money is between the citizen and Government,” he said.
[Zambia Daily Mail]
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shutdown, dont wast your monies in a non profitable enviroment.
Mr Little, can you please stop including PAYE as one of the taxes your company pays to govt. This is not a tax on your company. It is a tax on the salaries of all the workers in Zambia. Don’t insult our intelligence.
No. he is not insulting your intelligence. It is the lack of economics on your part that is a problem. Read again. Can’t you also see that PAYE imposes a cost burden on the company due to high wages demanded as PAYE increases?
I suppose you don’t pay tax on your income wherever you are because it is someone else paying for you. You have a very kind employer indeed! Are you serious or you just came up with this nonsense to have a dig at Livingstone? Expunge that warped logic from your head. Corporations and workers are responsible for paying their own taxes from the incomes that they earn for themselves. You’re the economic illiterate!
You are still operating because you have continued to make huge profits. You have given the amounts you have paid to govt as taxes and complained as being high, can you give us the figures in profits you made over the same period as well?
We have to maximise how much we get from our resources
In any case, this is the risk of any commodity business which is shared by the government and the equity investors. In high times, govmt must come in to ask more, and in low times, govmt must suffer the consequences of pull out of equity investors. This is just the nature of this business and Dr Dolittle knows that and should not surprised to see the windfal tax if it walks through his door at any time. He cannot be partying alone.
Mr Little you are lack to have a job in Zambia. I dont think you know what you are talk about. Social responsibility is a requirement globally because of the damage caused to the environment and community. Your company is polluting the villagers and a good number are dying in Solwezi. You should be reminded that before your greed company started operations in the area, the death rate was very low. Now the area is over polluted from all sort of chemicals, noises, crime, diseases and so on. Please next time think before you talk nonsense.
This ka Little is just belittling what the owed to govt. They hide profit figures once they sell copper abroad and he expect government to get tax on the reduced profit figures after they hide the true profit! Little that speech is little little substance.
@. Shifuni, please tell me one country in the world where workers don’t pay tax aka paye so that I migrate there? Using your own warped logic, why don’t you tell the govt to stop taxing civil servants salaries as this only adds to the cost of running the govt? What a Muppet! P A Y E is a tax on a workers’ incomes not a tax on govt or a corporation. You’re too gullible and a tax illiterate, I would advise you to keep quiet about stuff beyond your station
. Tell your Mr Little to pay his company’s taxes to Z R A. The workers’ he employs will also look take care of their tax obligations to the state.
@ Livingstone. PAYE – a small portion is paid by the individual and the larger portion is paid by the employer. so it is a direct expense on the employer
Gimme a break Adam Little, How do those figures mentioned amount to $ 2Billion, why don’t you give us your year on year tax payments from 2005? How much have you made in the same period in turnover and profits via your tax havens? Just last week in Reuters you were saying FQM is investing $4billion and asking gov’t for 15 year developmental agreements.
Its only in Africa that a foreign investor would complain about Pay-as-earn tax, mining royalties yet we are poor…in Europe he wouldn’t make it to fire exit before the press are right on him.
@Global citizen….learn more about taxation than exposing your “F” in tax subject…who told you that the company pays a larger amount of PAYE than an individual? these FQM always complain ,why continue mining if you are working on low profit?
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That’s what happens when you can no longer take the loot out of Africa like in the colonial days. in any case, don’t thumb suck Mr Little. Can you provide a comparison with the countries where tax imposed on mining companies is lower than Zambia? Can you also mention a country where PAYE is lower than Zambia? agreed there may be some countries but saying Zed has the highest mining tax rate is damn silly or you come across as someone uninformed. And don’t you mention company tax in the same sentence as PAYE, the later is deducted from an employee’s pay cheque and paid by the employer on his/her behalf.
Mr Little when you remit tax PAYE on behalf of employees does not mean it is your company that has paid. You simply facilitated payment as a result you cannot claim to have paid, so do not include it in your taxes. Can you also tell us about your turn over and profits for the same period?
We need to have professional journalists e.g A journalist who is also a qualified accountant, medical doctor, Engineer e.t.c. This is necessary to avoid such a story to be published before the person who was being interviewed can wrongly present himself without being challenged. If the interviewer was knowledgeable he/she would have reminded Mr Little that PAYE is not his company’s tax.
Little and his bosses Newall and Rascall have right, this tax rate is wrong. We should hold stake in mines to at least 51 percent, like SA, Lesotho and others !! LOL
Zambian People have no stake in Sentinel, Enterprise and Intrepid copper projects.
those looters use transfer pricing, maximise cash cost and hide behind development agreements to pay low tax. it is the same for Mopani (Glencore)
Little may think simple-minded zambians cannot be able to understand FQM accounts!
former govt was rotten to the core and PF govt is too lenient… zambians are not benefting from mining except for few slave jobs
WHERE IS THE CHANGE ???
NO ONE IS FORCING you guys to continue mining here!!! There many other companies eager to be given the mining rights!!!
@ boxale
those looters have to work here because they have been expelled from RDC last year because of fiscal maneuvering… Plunderers complain and cry although Zed is a paradise for them ! and our politicians fall into that trap.
what a mess…
Lies Lies…. Royalty Taxes alone in Canada where FQM is principled is a staggering 12%…. Such nonsense – There will come a day when we will nationalise – Zimbabwe style..
” Of the total taxes paid, about K390 billion (US$ 84 million) is Pay As You Earn and K1.97 trillion (US$ 234 million) mineral royalties. ”
Workers pay PAYE, not the mining companies. The mining companies take it out of workers wages and pay the government, but that doesn’t meant that the mines are paying PAYE.
Considering that all mining profits are based on the sale of Zambian minerals, it are the owners of these minerals (the Zambian people) who are paying these taxes, and the mining company’s profits.
” “When you combine high existing taxes and high cost of production, it’s a country people will think twice before investing,” he said. ”
Then leave already.
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