Mining Tax Revenues Used to Fight Poverty

October 11, 2010 Taxation in Zambia

Tax revenues collected by the Zambian Government from the mining industry are greatly exceeding forecasts, with recorded collections of ZMK 503 billion (approx. USD 106.1 million) so far in 2010, and with greater sums projected for 2011. The proceeds will eventually be used by the Government in funding its anti-poverty projects.

Speaking at a presentation of the 2011 budget Situmbeko Musokotwane, Finance Minister of Zambia, said that revenues from mining taxes are expected to reach ZMK 959.7 billion (approx. USD 202.5 million) in 2011. The figure could rise further, with the Minister announcing the commencement of several new copper mining projects across Zambia. Earlier Chriticles Mwansa, Commissioner General of the Zambia Revenue Authority (ZRA), revealed that between January and August of 2010 the Government had collected ZMK 503 billion (approx. USD 106.1 million) in taxes from the mining industry, exceeding projections by ZMK 265.3 billion (approx. USD 56.0 million). Revenues from mineral royalty taxes for the same period were recorded to be ZMK 249.4 billion (approx. USD 52.6 million).

Commenting on the budget, Situmbeko Musokotwane said that the Government holds a stream of steady and sizable revenues from mining related taxes, and can now afford to borrow more funds to finance anti-poverty projects and expand the economy. Further, he stated that Zambia’s lucrative mining sector will allow the Government to commence work to grow the country’s beef industry and upgrade electricity supplies to remote regions of country. He added that “with firm resolve and sustained investment in diversification, Zambia can feed and power Southern and Eastern Africa.” The Minister made further comments, indicating that the Government rests great hope that revenues from mining taxes will be instrumental in reducing the country’s poverty levels.

The Zambian Government currently levies two primary taxes on mining operations, the mining royalties tax and a variable-rate corporate taxes. The royalties are charged at 2 percent of the market value of minerals sold minus associated refining and delivery costs. Exporters of copper and cobalt are also faced with a 35 percent corporate income tax, while extractors of all other minerals face a rate of 15 percent. Any company listed on the Lusaka Stock Exchange will face a tax rate of 30 percent.

Photo by Earthwatcher

Tags: