By JUDITH NAMUTOWE –
THE current tax regime for mines has been redesigned for more equitable sharing of the mineral wealth between the Government and investors.
The new tax regime will result in additional revenue estimated at K1.7 billion from the mining sector in 2015.
Finance Minister Alexander Chikwanda told Parliament during the presentation of the 2015 National Budget yesterday that the taxes were categorised according to the mining systems as opposed to the current situation where taxes had been uniform.
Currently, the mineral royalty is six per cent across all mining operations, but the proposed terms have been divided, with mines operating underground mining attracting eight per cent mineral royalty.
The Government has proposed that the mineral royalty for open cast mining operations would be 20 per cent.
Mr Chikwanda said the proposed changes to the mining tax regime, which would not apply to mining of industrial minerals, would include a 30 per cent corporate income tax rate on income earned from tolling.
Another 30 per cent corporate income tax rate on income earned from processing of purchased mineral ores, concentrates and any other semi-processed minerals, currently taxed as income from mining operations, will be effected.
Last year Mr Chikwanda told Parliament that the Government needed to increase its income from the mining sector.
He said since then, significant progress has been made towards the implementation of a multi-purpose and multi-stakeholder framework for monitoring the country’s mineral value chain aimed at increasing transparency in the sector.
“Building on this framework and in order to achieve a more equitable distribution of the mineral wealth between the Government and the mining companies, I propose to redesign the mining fiscal regime by replacing the current two tier system with a simplified mining tax structure,” Mr Chikwanda said.
Mr Chikwanda said to ease tax compliance, the Government in 2004 introduced a presumptive tax for individual operators of public service vehicles at specific amounts based on vehicle sitting capacity.
“However, these amounts have not been adjusted in the last 10 years and have consequently been eroded by inflation. I, therefore, propose to double the presumptive tax payable by these operators. This measure will raise additional revenue of K3.8 million,” he said.
The Government has further proposed to increase the specific duty rate on refined edible oil to K2.20 per kilogramme from 85 Ngwee per kg to bring it at the same level with the rate for edible oils.
To implement some of the budgetary measures, Mr Chikwanda proposed to carry out amendments to the Customs and Excise Act, the Value Added Tax (VAT) Act, the Income Tax Act, the Property Transfer Tax Act and the Mines and Minerals Development Act.
This is with the view of updating, strengthening and removing ambiguities in certain sections of tax legislation to make tax administration more effective.
The proposed amendments to the Acts are expected to take effect from January 1, 2015.