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(DAILY MAIL ZM) FQM claim dismissed

COMMENT - Also check the comments on the Zambian Economist blog, "PAYE Is Not A Mining Tax".

FQM claim dismissed
August 9, 2012 | Filed under: Business | Posted by: web editor
By NANCY MWAPE

GOVERNMENT has dismissed claims by First Quantum Minerals (FQM) that Zambia has the highest fiscal regime for the mining sector globally, challenging the company to substantiate its claims with reputable publications. Deputy Finance Minister Miles Sampa says Government is working with the Zambia Revenue Authority to ensure that there are no income leakages from the mines.

Mr Sampa was reacting to FQM’s head of tax Adam Little who, in an interview with Daily Mail this week, stated that the tax rates applicable to the mining industry in the country are the highest in the world.

In an interview, Mr Sampa said a holder of a mining right is exempt from customs, excise and value added tax duties in respect of all machinery and equipment required for exploration or mining activities.

“Mr Little sounded more of a politician than an expert. His claims are unsubstantiated and as an expert in tax he should be factual,” he said.

Mr Sampa said mining companies should not claim pay-as-you-earn (PAYE) as part of their taxes as this is paid by workers.

[That kind of claim by the mines is infuriating, and shows their tendency towards tax evasion. All their money comes courtesy of the Zambian people, who own the copper in the first place. It are the end users who actually pay for everything, not the mines, not anyone else. - MrK]

In a separate interview, University of Zambia, School of Mines lecturer Mattias Mphande said mining companies should open up their books for public scrutiny. Dr Mphande said Zambia’s taxes are the lowest compared to other mining countries such as Australia, Canada, Botswana and Namibia.

He said Zambian mines enjoy 10 years tax holiday, 100 percent capital allowance as an investment incentive, reduced customs duty on heavy fuel oil from 30 to 15 percent. Dr Mphande said Zambia’s tax is very low compared to Australia that has introduced a windfall tax at 40 percent.

“The mining sector’s contribution to treasury is very low in totality, they pay low electricity rates. If they import fuel, it’s duty free while Zambians pay excise duty,” he said.

Dr Mphande said the wages and salaries paid to Zambian mine workers are very low compared to the Democratic Republic of Congo and Malawi.

“PAYE is tax paid by workers and when this is removed from their tax bracket, the mines contribute very little to the treasury,” he said.

He said it is sad to note that in all places where mining activities have taken place in Zambia citing the Copperbelt and now North Western provinces, people are poorer compared to places where there are no minerals.

Labels: FIRST QUANTUM MINING, MATHIAS MPHANDE, MILES SAMPA, PAYE, WINDFALL TAX

posted by MrK @ 4:11 PM