Local think tank, Policy Monitoring and Research Centre (PMRC) has welcomed the latest revision of the country’s mining tax regime.
In a statement, PMRC says it is evident that the revision is aimed at cushioning players in the mining sector from fluctuations of copper prices while ensuring that the Government collects optimal taxes and benefits from increased revenue collection during periods of high copper prices.
It observes that this the third revision to the mining tax regime since 2014 in a bid to achieve a lasting solution for the sector.
PMRC says while it is important to ensure that policies in the mining sector remain predictable and stable, it is equally important that these polices also remain responsive to prevailing trends in the industry.
It states that the Government has taken steps to ensure that the mining sector remains stable and sustainable.
“This move ensures that many jobs are saved and that mining operations are also sustained. The introduction of a mining tax on precious metals and gemstone shows commitment towards diversification away from copper. In the short term the reduction and suspension of some of the previous taxes will lead to a loss in revenue, however the losses in revenue will be offset by the economic contribution of the many jobs to be saved as well as an enabling environment that will encourage medium to long term investments in the sector,” it said.
It noted that the alignment of taxes to prevailing copper prices will see Zambia benefit in periods of high copper prices while sustaining the industry in periods of low copper prices.
It reiterated the need for the Government to continue on its path to reform the tax regime so that it remains stable and predictable in order to encourage further inflow of Foreign Direct Investment (FDI).
Cabinet, at its meeting held on Monday approved amendments to the mining tax regime and introduced a varied mineral royalty rate for copper based on the prevailing copper price.
It also Introduced a flat mineral royalty rate of five percent for other base metals, industrial minerals and energy mineral and a flat mineral royalty rate of six percent for precious metals and gemstones.
The changes also saw the suspension of the ten percent export duty on ores and concentrates for which there are no processing facilities in Zambia.
The revision of the tax regime also removed the variable profit tax on income from mining operations.