Maravi

(TIMES) New mines’ tax regime on cards

New mines’ tax regime on cards
By Times Reporter

THE team tasked to re-negotiate the development agreements with the mines has made tremendous progress in establishing a new tax regime which will be contained in 2008 national budget. Finance and National Planning Minister, Ng’andu Magande said in Lusaka yesterday that the team had almost completed its work and appealed to Zambians to be patient despite the long time the process had taken.

Mr Magande told a Press briefing that the mandate for the re-negotiation team was extended to cater for the establishment of an optimal fiscal and regulatory regime for the mining sector.

Emphasising that the team was wholly composed of Zambian top civil servants, Mr Magande said from its findings on the renegotiation, it became imperative to re-look at the entire tax regime for the sector.

Among the findings, he said, were that the Zambian fiscal regime had the lowest effective tax rate in the mining sector in the world with a total of 31.8 per cent followed by Peru with 39.7 per cent.

That and many other findings made it vital for the entire fiscal administration in the sector to be looked at so that the best possible one was introduced.

“Through this work that the team has undertaken, it has become apparent that there is need for further reform for both the fiscal and regulatory regime if the people of Zambia have to equitably benefit from their natural resources.

“I can comfortably state that a lot of work has already been done by the team towards developing an optimal fiscal and regulatory regime for the sector. I should therefore be able to give a comprehensive statement in the 2008 budget address on the outcome of the work of the team,” he said.

The team which visited various mining countries including Chile, engaged international consulting firms from Norway and United States of America, to assist it with an international perspective.

He said that the Government objective on the matter was to have a robust mining sector with attractive fiscal and regulatory system which would benefit both Zambians and the investors.

Mr Magande said the planned optimal fiscal and regulatory regime when implemented might render the current and future development agreements irrelevant.

He said it was important that the mining companies contributed more to Government to fulfil the stated purpose of development agreement on the need to secure maximum benefits for the local people.

Because of the concessions given to the mining investors in 2000, their tax contribution now did not correspond with their revenues following the soaring metal prices on the international market, hence Government’s decision to re-negotiate the agreements.

During the same occasion, Mr Magande denied former President Chiluba’s allegations that the Government instructed some ministries and departments to shift their bank accounts from Zambia National Commercial Bank (ZNCB) to Finance Bank.

Mr Magande, who displayed lists of accounts for different departments, with ZNCB still holding more accounts, said it was not possible for a Government official to order account transfers. He said these decisions were made by individual ministries or departments following tender procedures centrally carried out.

Mr Magande said following tender procedures, the banks were short-listed and it would be up to a respective ministry or department to pick their bank from the list based on their needs.

On Dr Chiluba’s allegations that TAZAMA, ZESCO and Indeni Oil Refinery, were ordered to move their policies from Zambia State Insurance Corporation (ZSIC) to Professional Insurance Corporation of Zambia (PICZ), he said the procedures were almost the same.

He said he particularly talked to Zesco managing director, Rhodnie Sisala yesterday who reportedly confirmed to him that Zesco had moved from ZSIC to PICZ in 2004 after seeing the PICZ’s conditions were more competitive.

And Mr Magande said that the Government had transferred all its shareholding in Maamba Collieries to ZCCM-Investment Holdings.

He said, however, that the payments to creditors arising from the scheme would be effected after it had been approved by the High Court on December 17, 2007.

At the same occasion, ZCCM-IH managing director, Joseph Chikolwa said that the creditors who were owed about K7.6 billion had agreed to write off 75 per cent of the debts.

Labels: DEVELOPMENT AGREEMENTS, MAGANDE, MINING CONTRACTS, TAXATION

posted by MrK @ 6:59 PM