THE Chamber of Mines of Zambia has recommended that the Government should appoint an independent international auditor to carry out compliance audits to address concerns expressed by stakeholders and members of the public on whether the mining companies are honest enough in their voluntary declarations.
Chamber general manager Frederick Bantubonse said in a statement obtained in Kitwe yesterday that it was imperative that assertions by some parties were addressed and subsequently appreciated.
Mr Bantubonse noted that in January 2008 late president Levy Mwanawasa told the nation that the Government had discovered that effective tax rate in Zambia was the lowest in the world at 31%.
The Government then wanted the effective tax rate to be increased to 47%.
He explained that after the budget was presented to Parliament in 2008, which proposed to introduce, among others, windfall tax, the mining industry contracted tax consultants to advise on what the effective tax rate would be once the new tax measures were introduced.
The consultants informed the industry that the effective tax rate would be well over 80% far above the 47% that was targeted by the Government.
“The perception by many people in Zambia seems to be that the abolition of windfall tax means that mining companies have been exempted from paying taxes,” Mr Bantubonse said.
He said it was not the case as mining companies pay other taxes including company tax, minerals royalty tax, Value Added Tax, and others.
The company tax at 30% of profit, in particular, would increase greatly once carry over losses and capital allowances are liquidated and more mining companies become tax liable.
“There is still, therefore, a form of windfall tax in operation called variable profit tax which is based on profit and is triggered when a mining company makes operating profit of over eight per cent,” Mr Bantubonse explained.
He said in view of the misunderstanding, the chamber was recommending to the Government to engage an independent international auditor to carry out compliance audits.
Efforts to get mines minister Wilbur Simuusa and his deputy Richard Musukwa failed as their mobile phones were not reachable by press time.
[Times of Zambia]