Monday, December 30, 2013

SI 89 was a scheme to evade tax - Banda
By Moses Kuwema
Mon 04 Nov. 2013, 14:00 CAT

FORMER mines deputy minister Ronald Banda says the withdrawn Statutory Instrument number 89 that allowed exports of copper ores and concentrates tax-free was a scheme of trying to evade tax.

In an interview, Banda, who is also former Zambia Revenue Authority deputy commissioner technical, said Statutory Instrument No 89 was an additional tax incentive that reduced the tax liability of First Quantum Minerals and other beneficiaries.

He said SI 89 was an unnecessary relief that should not have been granted in the first place.

"It was a scheme of trying to evade tax. There was no need for SI 89. I don't know why it was even considered. The finance minister cannot be misled. When you make an SI, it follows certain procedure, so it would be strange for the minister to just sign a document without understanding its implications," Banda said.

He said the Ministry of Justice had legal draftsmen who ensure that SIs conform to certain standards.

"Tax in the mining industry and other businesses is treated differently because mines are wasting assets. They involve costly infrastructure and as a result, the mining industry has historically been treated differently in terms of tax compared to other industries. This is so in relation to capital expenditure. Because of this treatment, there are specific provisions contained in the income tax Act Cap 323 that deal with mining deductions," he said.

Banda said capital expenditure incurred on the construction of a smelter would normally be allowed as a deduction in ascertaining the gains or profits from the mining industry.

On Monday last week, President Michael Sata reversed SI 89, which finance minister Alexander Chikwanda signed on October 4.

SI 89, which was to be in force up to September 30, 2014, was to reverse the November 2011 decision of the PF government to impose a 10 per cent export levy on copper concentrates and ores to encourage value addition to copper exports and improve accountability in the vast mining sector.

SI 89 has since been replaced with SI 99, which has reinstated the 10 per cent export duty on copper concentrates and ores.

Labels: , ,


Post a Comment

Subscribe to Post Comments [Atom]

Links to this post:

Create a Link

<< Home