Mining Industry

Mining firms in Zambia on Monday expressed concern that the government failed to use the 2020 national budget to revise the 2019 mining tax regime despite evidence suggesting that it is reducing tax revenues rather than increasing them.

“Since January this year, Zambia has had — by a long way — the highest mining tax burden compared to other mining countries. Depending on the price of copper, mines could indeed end up paying more in tax than they actually receive in profit. Because of this extraordinary squeeze, there is not enough left to invest in operations, or to expand them,” said the Zambia Chamber of Mines, an association of foreign mining firms operating in the country in a release.

It added that the shrinkage, both in production and profits, means that although tax rates are high, actual tax revenues will fall.

The mining body has since projected that the government will this year receive about 80 million U.S. dollars less in royalties an profits than did in 2018 and some 140 million dollars less than it could have received if it had not made the tax changes.

According to the mining firms, the 2020 budget has not only failed to give respite from the tax burden, but added to it, adding that the effect of additional tax measures will be to increase the cost of capital equipment by 10 percent and the cost of consumables such as spare parts by 16 percent.

The mining firms have since maintained that its prediction that the country will record a 100,000 tons reduction in copper production for this year, with a further commensurate drop in 2020. Enditem

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