Wednesday, July 17, 2024

Low rate of payment of mineral royalty tax due to instability in the mining tax regime


The Southern African Resource Watch(SARW) has attributed the low rate of payment of mineral royalty tax to the Zambian government, to instability in the country’s mining tax regime.

Zambia Revenue Authority (ZRA) Commissioner General Dingani Banda recently disclosed that an internal verification audit revealed that only 183 companies out of 2,416 mines paid mineral royalty at the end of 2021 with at least 910 companies exporting minerals but not declaring mineral royalty.

SARW Researcher and Advocacy Officer , Edward Lange attributes this alarming revelation to the mining tax regime that is always made to suit mine owners and not Zambia, a lack of serious monitoring mechanisms and an unreliable reporting system, all of which need strengthening.

Mr. Lange suggests that the Ministries Of Finance, Mines And Commerce engage in a review aimed at making the Extractive Industry’s Transparency Initiative (EITI) into law by either embedding it into the mines and minerals act or creating it as a standalone legislation to guarantee transparency and accountability.

He also suggests that a code of conduct for political office bearers be put in place, to stop leaders from participating in certain businesses which renders them interested while recommending a strengthened reporting system and a long term mining tax fiscal regime.

During the week, The Zambia Revenue Authority expressed concern with the undervaluation of minerals. ZRA Commissioner General Dingani Banda said that s the undervaluation of minerals is affecting the collection of mineral royalties which are calculated based on the value.

Mr. Banda disclosed that ZRA has instituted investigations on companies exporting minerals but not declaring mineral royalties.

He was speaking when he inspected a truck laden with precious stones in Chongwe in the company of Zambia National Service Commander Lieutenant General MALITI SOLOCHI.

Meanwhile, General SOLOCHI requested ZRA to facilitate an orientation exercise for officers to acquaint them a valuation of minerals going forward.


    • Tell me about this, how do we have these statistics and fail to act? These are ripe companies for withdrawal of licenses, we should be serious.

  1. Haha you lying f00Is. That is not the reason. The reason is because we now have a president who is controlled by the same multinationals that bribed him to under value our mines during privatisation. So he now gives them tax breaks. You have a puppet for a president

  2. Slam them with penalties and interest based on you calculations, whether or not they made a profit. That’s what should be done to those who fail to make voluntary tax disclosure.

  3. UPND has demonstrated that it is a million times easier for them to take action against 300 Kasompe dwellers than to take action against mining companies not paying tax. They would rather change the law to suit mining companies.

  4. The reason is simpl, we had stewards that either did each other personal favours with the mine owners or the Chipani knew about it and just mwibala. If ever there was any benefit that accrued to an ordinary citizen, it was by sheer accident. Their priority was plunder.

  5. Mineral royalty previously (2021) was computed on the VALUE of SALES. Let’s imagine expenses exceeding sales, it follows that the mine is loss making and will fail to pay ZRA dues.
    A tax system that considers expenses before triggering a tax, provides a win for a mine and a win for a tax collector. ZRA mustn’t be a burden on businesses, but a copartner.
    There in lies the difference between new mineral royalty taxes and those old ones where the 910 companies defaulted. After the Situmbeko Musokotwane budget, royalties became tax deductible, meaning tax is not on mineral sales, but PROFITS after sales.
    Hopefully, this year, several others will join the 183 compliant firms.

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