Maravi

(DAILY MAIL, REUTERS) Zambia won’t reimburse mining firms

Zambia won’t reimburse mining firms

ZAMBIA will not refund foreign mining companies millions of dollars they paid in taxes when windfall tax law was in force, but could revise existing taxes, the attorney-general said on Wednesday.

Mr Mumba Malila said the development agreements, which gave the mine owners the right to compensation if the government failed to comply with agreed tax stability guarantees, were no longer binding, after Zambia amended its mining law in 2007.

Canada’s First Quantum Minerals said this week it had paid about $140 million in higher taxes by the end of June this year, and wanted to seek a refund.

But Malila said although the government was willing to discuss the current taxes with mining companies, there was no guarantee that Zambia will pay back the $140 million to First Quantum.

“The development agreements were rendered null and void by the amendment of the law and any benefits that were accruing to the mines ceased after enactment of the new Mines and Minerals Development Act,” Mr Malila said.

“They want to discuss the taxes with the government but the starting point of such talks cannot be that the development agreements are binding. The Zambian law does not recognise the development agreements anymore,” Mr Malila said.

In 2007 Zambia introduced new mining taxes including a 25 percent windfall profit tax, which it quashed last year, following fears of closure of some mines due to the global financial crisis and some pressure from the foreign mine owners.

Zambia also introduced other taxes to cash in on the boom in commodity prices in 2008.

This created a controversy with mining companies, which said the government had gone against contracts it had signed with them promising lower taxes.

But many civils society organisation and unions including the donors contend that the mining firms have ripped off Zambia because of the lopsided development agreements that favoured miners and have since been scrapped.

Zambia also scrapped off windfall tax which some Parliamentrians are now arguing was an omission because of the appreciating copper prices with little prospects for Zambia to gain enough taxes from mines. REUTERS.

Labels: DEVELOPMENT AGREEMENTS, FIRST QUANTUM MINING, MUMBA MALILA, WINDFALL TAX

posted by MrK @ 5:26 AM