Mining companies in Zambia have agreed to pay K1.426 trillion in tax arrears arising from the 2008 mining tax regime.
Finance and national planning minister Situmbeko Musokotwane told parliament in a ministerial statement that this follows the finalization of the discussions between government and all the mining companies.
Dr Musokotwane says the discussion focused on the need for the mining companies to pay tax arrears arising from the changes that were introduced in 2008.
He says all the mining companies have agreed to pay the tax arrears.
He adds that it has also been agreed that the windfall tax arrears be reassessed at 25 percent to ensure that the assessed total liability does not exceed the 47 percent effective tax rate which was intended.
Dr Musokotwane says of the total tax arrears owed by the mining companies, government expects that K458.5 billion will be paid by the end of 2010, while the balance of K967.6 billion will be settled in 2011.
He says government will ensure that all arrears owed by the mining companies are paid by 30th June 2011.
Dr Musokotwane further disclosed that all the mining companies have agreed to start paying taxes based on the current tax regime.
And Dr Musokotwane says the design of the abolished windfall tax was defective and not consistent with international practice as it was based on taxing revenue.
He explains that the windfall tax did not take into account the cost of production.
He says the normal practice is to tax windfall profits as is the current practice for mining, banking and telecommunications.