Zambia Hikes Mine Taxes

November 16, 2011 Taxation in Zambia

Zambia Mine TaxLUSAKA – Mining operators in Zambia are set to face a potential double blow of raised taxes, with the introduction of a new windfall tax and the raise of mineral royalty taxes.

On the 12th and 13th of November the government of Zambia announced a set of major changes to the tax treatment of the mining industry operating in the country, with newly published government budgetary plan doubling the national mineral royalty tax rate, and indications by the Minister of Commerce and Industry of Zambia Bob Sichinga revealing that the country will soon see a windfall tax on mining profits.

During an interview on the national radio, the Minister said that the government is currently investigating how to instate a new windfall tax without reducing employment levels across the mining industry. Bob Sichinga added that before any further move is made to implement the tax, the government will first double the mineral royalty tax, which is currently set at a rate of 3 percent. Earlier in the week the Minister of Finance of Zambia Alexander Chikwanda also indicated that the government is likely to introduce a windfall tax.

Local mining sector experts forecasted that a full set of new regulations regarding windfall tax would also be introduced in the next year budget. Bob Sichinga added despite the willingness of the government to introduce the new tax in the current budget, the move was not feasible due to budgetary position and economic situation arising due to decisions made by the previous government.

Photo by tuxophil