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IMF Urges Zambia To Rethink Changes To Mining Tax Regime

by Lorys Charalambous, Tax-News.com, Cyprus

25 December 2014


The International Monetary Fund (IMF) has urged Zambia to reconsider its plan to hike the royalties on mining companies.

The Government's 2015 Budget proposed shifting to a royalty-only mining tax regime with rates of eight percent and 20 percent for underground mining and open-cast mining, respectively. Currently all mining companies in the country face a six percent royalty.

The proposal is intended to increase Government income from the mining sector and to achieve a more equitable distribution of mineral returns between the Government and the mining companies.

Canada-based Barrick Gold announced recently that it will suspend operations at the Lumwana copper mine in Zambia on account of the plan.

Tsidi Tsikata, the leader of an IMF mission to Zambia, said that "the authorities indicated that they are looking to assuage the concerns of mines and prevent closures."

Tsikata also urged the Government to resolve an impasse in the payment of some USD600m in value-added tax (VAT) refunds to exporters in the mining sector.

"Greater policy stability and consistency would help anchor confidence in Zambia as an attractive investment destination," he said.

TAGS: tax | investment | value added tax (VAT) | mining | royalties | International Monetary Fund (IMF) | tax rates | Canada | Zambia | tax reform

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