Saturday, August 04, 2007
By Joan Chirwa
Thursday August 02, 2007 [04:00]
GOVERNMENT has said it will continue making development agreements with large-scale investors, and has promised to publicise the whole process for public scrutiny. And the government has further indicated that it would not allow tax holidays in the mining sector, but work towards the adoption of a standard corporate tax rate for the industry.
In a draft mining policy compiled by the Ministry of Mines and Minerals Development late last year to replace the 1995 policy, the government states that once the new policy is implemented, new development agreements would be subject to issues such as parliamentary ratification, containing fiscal relief measures preceded by being gazetted and published for public scrutiny.
The proposed new policy further states that although development agreements would be continued, provisions relating to the fiscal climate would only be included in exceptional circumstances and only after inter-ministerial approval including the Ministry of Finance and National Planning and parliamentary ratification.
The government is also planning on the periodic review of tax incentives and other forms of fiscal concessions in the new policy to reflect changing macro-economic and market conditions.
Discussions are currently going on regarding the revision of the development agreements made with the mining companies several years back, considering that copper prices were currently fetching at an attractive price on the international market.
In this year’s national budget, the government also announced that royalty taxes would be revised from 0.6 per cent and two per cent to three per cent for both base and precious metals respectively.
This is an effort to increase government revenue from its vast mineral resources.
The country last year gained K35 billion from mines in form of royalties compared to profits of above K1 trillion earned by the mining companies in the country.
And the document further indicates that the government is currently seeking ways of removing barriers to equity participation by Zambians in mining companies.
It is noted that the challenge of increasing the level of ownership and participation by Zambians in mining companies is assuming growing importance.
The draft policy states that the absence of the Zambian private sector in the ownership of the mining industry remained a major challenge for the government.
“Government will do its utmost to remove barriers to equity participation by Zambians in mining companies, within the overall framework of the citizen economic empowerment Act passed by Parliament,” states the policy.