The government has removed windfall tax in order to salvage the mining sector from collapse. However, the government has retained the variable profit tax , which will still capture any windfall gains that may arise in the sector.
Zambia’s mining sector which has seen some companies winding up has been badly affected due to the falling prices of copper and other commodities on the international market.
The global effects on the sector led to government collecting revenue of K319.5 billion last year, representing a 65 percent drop from the targeted K917.3 billion by the end of December 2008.
Finance and national planning minister Dr. Situmbeko Musokotwane said government has also allowed hedging income to be a part of the mining income for tax purposes and increased capital allowance to 100 percent as an investment incentive.
Dr. Musokotwane said’ that measures have been taken after consultations with the industry and other stakeholders and are in line with the impact of the global crisis on the sector.
He said the concession through which government will register a revenue loss of K19.3billion will come into effect from April 1, 2009.
Government has however maintained corperate tax at 30 percent, mineral royalty rate on base metals at 3 percent of gross value, withholding tax on interest , royalties management fees at 15 percent .
Government last year introduced a tax of 25 percent at the copper price of $US 2.50 per pound , 50 percent at price for the next 50 cents and increase in price and $US 75 percent for above $US 3.50 per pound.
These measures were intended to ensure that the nation received a fair return from its resources, while maintaining a globally competitive mining industry.
However the sector despite the challenges recorded a 4.9 percent growth as compared to 3.6 percent recorded for 2007.
Preliminary estimates indicate that copper production increased by 3.7 percent to 569,891 metric tones while Cobalt production increased by 19.5 percent from 4,414 metric tones in 2007 to 5,275 metric tones.
The Minister has further proposed to reduce customs duty on Heavy Oil from 30 to 15 percent and to remove customs duty on copper powder, copper flakes and copper blisters.
He has also proposed to include copper and cobalt concentrates on the import deferment scheme for Value Added Tax (VAT) purposes.
He stated that the measure will reduce the operating costs of mining companies as well as encourage the utilization of local smelting capacity.
ENDS/MKM/PKZANIS
ta
LT we need a complete 2009 budget
so that the infester gets richer!!! :)>-:)>-
“Copper basenda, mayo we copper basenda !” – FTJ
Damn!
Windfall tax is a huge mistake. :d
So this are the new budjet proposals,looks fine to me but i have to study them closely before making my general comment
Make up your minds guys!!
With a budget of $3 Billion. We need to find other sources to generate GDP.
They do as they please ba Makaka
Awe Nomba
#5 Removing or having it in effect ?
Ba Lt maybe it is better for you to post the whole budget, you just have to find a way of doing it ,so that we can have a complete picture,Coz some of us are more interested in seeing how much money has been channeled to other areas like health and education,smart job though 😕
most zambian’s are snobs, its agriculture now or no GDP for our nation. We just want to be smart for nothing. **==**==
This should serve as a lesson that we need THINK TANKS(not just academicians and civil servants but seasoned industry proven professionals and executives)for the various sectors of the economy and to engage them rigourosly in the planning process. Not merely reacting to situations.One moment there are literraly zero taxes next there are punitive winfall taxes and next there is no windfall tax. This shows reactionary management,lack of insight/forward planning. You cannot run a govt like game of draughts.Beware of oil industry players (for the much talked about chavuma oil) like Exxon they are tough hard nosed getters. You display such brinkmanship/incompetence at your peril
Thats the only problem of depending on external borrowing. The British, SA, Australia have bn pushing government to remove the so called windfall tax. The government cannot listen to its people but to the external guys where it borrows cash…Nafulwa sana
Budget details can be found on parliament’s web page
This is a good move by the government. It’s pointless to tax companies when there’s no profit coming from them.
#17. Nine Chale BUT THIS MOVE IS NOT TO BE TAKEN FOR GRANTED!! [-x
it is not a time to relax!!
I fail to understanding this windfall tax concept. What I thought was that the tax was triggered by the price of the base metals. If they rise to a certain level they attract a particular %, if they fall below a certain level they don’t attract any. Now that the copper price has fallen, I would assume that there will be to tax attracted as the price is below the taxable threshold. So what does the FM mean when he says he has removed the windfall tax? Would I be right to argue that it is misleading since no mine was expected to pay any such tax? Suppose the business trend changes abruptly and the price of copper rises to 10,000 pounds per ton, will the minister need to go back to parley to
amend the law to re-introduce the same tax again? I thought this type of tax is self regulating. Anyway can someone shed light? Am lost
the mining companies have won the battle? lwanya. where will my former lecturer get money to finance the budget?
Circus
EXTRACT OF THE 2009 BUDGET SPEECH
“Mr Speaker, I also propose to increase customs
duty on cellular phone handsets from 5
percent to 15 percent to encourage local
production of handsets. This measure will
result in a revenue gain of K3.6 billion.”
Which Cellphone Company is this ? 😮
TWANWA NAFUTI NINE CHALE !
“…I therefore propose to
reduce excise duty on clear beer from 75
to 60 percent. This measure will lead to
improved tax compliance…”
latest: GTV CLOSES DOWN WITH IMMEDIATE EFFECT
I need 6 Numbers from anyone !!
The Numbers should be betweeb 0 and 49!!
I need the Numbers for the German Lottery running at 35 Million Euros !
please post the Numbers people. You will be rewarded!! I promise
#25 IS A SERIOUS MATTER!! I AM WAITING
Its all foreigners that benefit from Zambia
OOOOHH!! Anyway, African mind or is it Zambian mind.
Today we are for freefall, tomorrow we remove freefall tax.
Why not study things carefully before applying them. These leaders behave like pregnant women.Lelo salt is dad,mailo ati awe iyo simunaike salt. Decision making is not waking up from your sleep where you had a dream of what you learnt from NIPA 40yrs ago and them you convince your former classmates from munali.Who then accepts it.
The Firm.
Number 19 – I think the windfall tax applies to different portions of the price above $2.50. For example, say price was $5.00 per pound. Then total windfall tax would be ($0.50 X 25%) + ($0.50 X 50%) + ($1.50 X 75%). You are correct in that they are currently not paying this tax because price of copper is less than $2.50 per pound.
If the price of copper rises, then mining companies will have to pay 15% tax on the portion of their profit greater than 8% corporate profit – This was something new introduced last year. Government is saying this will benefit country if price of copper rises even though windfall tax has been removed.
#25,Jamaco,
try these numbers,16, 07,05,25,02,27
Good luck and cross your fingers… <:-p<:-p<:-p=d>
#25,Jamaco,
try 16, 26,05,07,35,01
cross your fingers and goodluck!! <:-p<:-p<:-p<:-p<:-p
Cutey many thanks. I will release the wining numbers tomorrow. Cheers
Zambia **==
#32,
and I think its time you went to bed..you need a rest…save some energy for tomorrows winnings..
:-?:-?|-)
😕
It is hard to understand!
smart move. :)**==
Bail out for mines but nada for Zed companies like Zambian Airways…
Musokotwane is not a true zambian people’s freind. He hid behind many words without giving any substance. Magande was right and stood for zambia by insisting upon the windfall tax. its our wealth. Why scrap it when it wouldnt apply anyway with the reduced copper prices. He is more for he foreign infesters than our own. which of our people is going to benefit from the so called incentives for investment. When is Zambia gonna be for us?
Dr. Sitambuli Munongotwane. Your action on the mines is not enough. Despite the copper price falling on lME and elsewhere. The only way for this country to reap the full benefits from its natural resourses is to establish industries that will add value to our natural resources. For as long as we continue exporting copper etc in raw form we shall contune sliding each year twenty years behind. Do you pipo in authority read and analyse what Prof. Clive Chirwa writes in the “Sunday Post”? The current crop of leaders have no vision for this country.GRZ needs to come out bold and form a THINK tank composed of Chirwa’s and alike other wise we shall continue running into circles.
Ayatollah, It is the nature of Venture Capital I am afraid. They don’t much care where their money is invested, as long as it is earning an average annual return in double digits over the length of the investment. With the global downturn, current mining operations are providing less than double digit returns, so government apparently hopes to persuade them to stay by promising an even bigger return later on (which would bring their average back up). Not saying I agree, just trying to explain the thinking of most venture capitalists.
Number 15 Please come back. The Flag you have is no good to foreigners. They will put a burning tyre around your neck. PlizzzzzzzzzzzzcomebackplizzzzzzzzzzzzzzZZZZZZZZ
If the copper price is below the windfall tax level, why remove it?
Is this government run by the Zambian people’s elected representatives, or by the mining companies?