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Zambia Revises Royalties To Aid Copper Miners

by Lorys Charalambous, Tax-News.com, Cyprus

23 February 2016


Zambia's Cabinet has agreed new proposals to redesign the taxation regime for mining companies, following the aborted attempt to hike royalties in 2015.

Under the tax arrangements that were subsequently revoked last year, the six percent royalty for all mines was to have been replaced by split levels of eight percent and 20 percent on underground mining and on open cast mining operations, respectively. They were replaced by keeping the previous six percent royalty rate for underground mining and fixing a nine percent rate for open cast operations.

The Government has now approved a system of variable royalty rates for copper. It has been reported that those rates will vary between four percent and six percent, depending on prevailing copper market prices. The new system is aimed at sustaining Zambia's significant copper mining operations, and the jobs they provide, in a period of low mineral prices.

In addition, a flat mineral royalty rate of five percent is to be set for other base metals and minerals; and of six percent for precious metals and gemstones.

The Cabinet have also approved a suspension of the 10 percent export duty on ores and concentrates for which there are no processing facilities in Zambia, but have maintained the current 30 percent corporate income tax on mining operations.

The review of the taxation regime for the mining sector, the Government said, "is deemed necessary to sustain continuous operation of existing mining companies, and avert the suspension of mining operations and job losses."

TAGS: tax | business | mining | export duty | royalties | tax rates | Zambia | tax reform

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