MAC: Mines and Communities

Zambian parliament to abolish mining windfall tax

Published by MAC on 2009-04-06


In a pragmatic move Zambia's parliament has agreed to abolish the controversial 25 percent windfall tax imposed on foreign mining companies.


21st March 2009


Zambia's parliament has agreed to abolish a controversial 25 percent windfall tax to reduce pressure on foreign mining firms hit by the global financial crisis, Mines Minister Maxwell Mwale said on Saturday.

Mwale said parliament agreed on Friday to repeal the tax, introduced in April 2008 and triggered protests by mining companies.

"Basically what it means is that one tax regime they did not like because it was eating into their profitability is scrapped and they should have no complaints," Mwale said.

"We were aware as the government of (constraints) created by higher taxes at the mines. Zambia will now be perceived as a friendly country in terms of tax regime and it will attract more investments."

In his budget speech to parliament in January, Finance Minister Situmbeko Musokotwane proposed scrapping the tax, to cushion the country's key copper mining industry from weak metals prices stemming from the global crisis.

On Saturday, officials said parliament also approved a proposal to cut a duty on heavy fuel oils to 15 percent from 30 percent and removing customs duty on copper powder, copper flakes and copper blisters.

But the government will keep a 15 percent variable windfall tax, which the mines had also wanted removed.

The southern African country depends on copper and cobalt for more than 63 percent of government revenues.

Foreign mining firms have complained of higher taxes, high electricity tariffs and fuel prices and falling global metals prices as hindrances to their operations. (Reporting by Shapi Shacinda; Editing by Stella Mapenzauswa)

© Thomson Reuters 2009. All rights reserved.

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