Cabinet has approved the Income Tax (Amendment) Bill of 2015, which seeks to implement the proposed changes to the mining tax regime and increase corporate income tax for mining operations from zero percent to 30 percent.
Acting chief Government spokesperson Ngosa Simbyakula told journalists shortly after a Cabinet meeting yesterday that the Bill also seeks to introduce a variable profit tax of up to 15 percent for mining operations.
Corporate income tax is a levy placed on the profit of a firm, with different rates used for different levels of profits.
Variable profit tax comes into play when corporate expense varies with production output. Variable costs are those that vary depending on a company’s production volume; they rise as production increases and fall as production decreases.
Dr Simbyakula said the Bill will also seek to increase corporate income tax rate for mineral processing from 30 percent to 35 percent and further limit the deduction of losses for mining operations to 50 percent of taxable profit charge.
Dr Simbyakula, who is also Minister of Justice, said Cabinet approved the Mines and Minerals Development Bill 2015, for introduction in Parliament during this sitting.
Mineral royalty tax has been set at nine percent for open-cast mining operations and six percent for underground mining operations.
“This Bill further seeks to revise the law relating to the exploration, mining and processing of minerals, provide for safety, health and environmental protection in mining operations,” Dr Simbyakula said.
He also said Cabinet has approved the Gold Trade (Repeal) Bill that seeks to repeal the Gold Trade Act, in order to avoid duplicity as dealing in gold will be provided for in the revised Mines and Minerals Development Act.
Cabinet also approved the double taxation agreement between the Zambian government and the Kingdom of Netherlands with a view to avoiding double taxation and prevention of fiscal evasion with respect to taxes on income.
Well done President Lungu.
Progress mwe?
That’s one of the easiest tax to evade its the last thing to pay after deductions..do the math?
Did cabinet take jemasoni before arriving at that decisions? Too many u-turns. If the mines are not happy with that decision, the no vision no direction govt will reverse the decision.
If you can’t get it through the front door, sneak it through the back door. The problem here is that if you don’t set up a monitoring desk in the heart of these business, the size of profits become elastic to go round paying the correct tax.
The monitoring desk must be set up inside their computer to give you any useful information. Mining is actually one of the easier businesses to audit, particularly so when the gross revenue is linked to market prices (London Metal Exchange) as in Zambia. Finance and telecoms are much harder.
Increasing BY 30% is different from increasing TO 30%. Give us full barked news and not one hanging like this ba LT
it comes back to the same difference…
The PFools want to take credit where there’s none to take. These tax rates were applicable up to 31 December 2014 after which Chikwanda introduced his foolish 20% mineral royalty and 0% corporate tax for mines. What Cabinet has approved is a reversion to the previous tax regime with minor tweaks. Chikwanda is a disaster for Zambia.
What is full barked news? There is no dog barking here. Hehehe
It is paid on profits. At which point will be the profits measured when sales are done outside the countries and revenue is kept outside the country. My thinking is that they will only declare the sales as they want limiting the profit margin to literally minimal. We shall need a mechanism to determine the sales per tonne and then multiply that by the tonnage exported since this information will be readily available. Whether this will be the best measure still remains to be seen. My guess! this is another failed attempt of collecting taxes from the mines. It will just be on paper.
Absoutely Spot on!!
Another Zambian knee-jerk act. I often say that all that free parking should be charging at least 1 Ngwee per entry so that when you begin charging it doesn’t become shocking. Same with this zero to hero effort right here. We actually know it is an academic exercise. More will be collected from hapless landlords with their 1971 revived dinosaur than from this illusive collection effort fraught with fraudulent mining corporates who know how to twist books and cook figures while laws are stewing…
The major weakness of the tax law has always been the capital allowances. If you allow more than 10 % per year, you will see no profit tax from a mine for the first ten years of production. Very technical, but very simple.
Capital allowances are like depreciation. If a business makes tax or accounting losses you need to understand what is going wrong and why. There are no business plans based on losses. This is not witchcraft. You need to use your little brain.
You people do not understand. What the minister is saying is that Zambia will not collect any corporate tax from the mines. They want you to think that they are doing something about lost revenue in the form of mineral loyalty tax which has been reduced from 20% to 9%. just think of it, how many of these mines declare profits? which profits are we going to tax?
I weep for Zambia
Another exercise in futulity.What a country.
K.K should tell us the truth about the pacts he made with the dark world which cause this country to be so wretched..eish takwabafye.A country with no Midas touch.
Please contribute intelligently to the discussion. This is why we get nowhere with progress. What with people thinking like you?
Only open pit mines declare profits; others hide profits in their underpants
BOO!
Copper price is plummeting.
Every copper mine in Zambia will now show a loss.
SO THIS MEASURE WILL YIELD NOTHING!
When will you people learn?
Surely, there is a better way of getting paid for your God-given resources?
Do you need expats to come back and work as civil servants?
When all is said and done, just remember that foreign investors are not interested in the development of the country, they are interested in making profit.
The more profit they make, the better for them. They will do anything to avoid paying the correct tax.
true chikwanda has messed up! the govt has only reverted to the old fiscal regime with only change being the MRT.
Way forward for Zambians to benefit is for GRZ to own up & set up an independent team of experts to be responsible for monitoring & auditing of the Mines – otherwise no mining co will ever pay 30% corporate tax. GRZ does not have the experts nor skills set. KCM has been a fraud and has never paid any corporate tax to GRZ. is it any wonder why other MINES have re-defined the accounting practice the KCM way – 2 Sets of Books for govt & for the owners.
the chamber of mines membership should also be legislatated on basis of ethical behavior to deal with the likes of KCM.
Guys,
There has been a highly-paid 6-man European Commission sponsored auditing team at the Mines Ministry since November last year. What are they doing…JUST ENJOYING THE HOSPITALITY AND HIGH LIFESTYLE OF ZAMBIA?
Their terms of reference is to set up checks and balances for the GRZ authorities. I applied for the job and was given the job description.
Despite working in Zed for 19 years, they appointing authority in Brussels went for French speaking continental Europeans. These guys must be held accountable.
It is difficult to tell if this Lungu GRZ will not withdraw this bill…there has been so many retractions. If you are going to fear these mining thieves again then I am going to with draw my support for PF. Remember Zambians are watching you closely. Do what is right for Zambia.
Peace and Prosperity for Mother Zambia.
Do these bills include internationally accepted penalties for evading taxes? If not the rates are useless. The Americans have caught many companies and made them pay billions of dollars for bribery. Once they get caught they never do it again. The cases are such that it does not matter when the offence was made. Sometime the CEOs lose their jobs. Does the government know how to monitor conformance? Otherwise it will be (Catch me if you can).
Nonsense. It’s all a lie. We are not getting enough from mines. Period