ZIMBABWE needs a new mining fiscal regime to balance the interest of all stakeholders, Mines and Mining Development Deputy Minister Fred Moyo has said.Deputy Minister Moyo said key stakeholders in this nexus included mining companies, Government and communities from where the mining takes place. This comes as a study by semi-autonomous think tank, Zimbabwe Economic Analysis and Research Unit concluded that while the country’s taxation regime was good, it had a few aspects that could sterilize mining ground.
Zimbabwe has now been working on a new mining taxation system for almost five years to address aspects that affected parties feel disadvantage them. Apart from the perceived high threshold of some of the taxes and charges, mining companies argue that the fragmented charges are too many.
These include royalties, corporate income tax, VAT, customs duty, PAYE, marketing commissions, capital gains tax, local authorities’ charges, EMA and licence fees or registration fees, among other charges.
Mining companies are also required to pay presumptive tax, additional profit tax, standards development levy, radiation Protection levy, and engineering council levy. “The taxation regime must be fair to everybody, must be easy to understand and implement and must be responsive to changes in the market.
“Tariffs must be tied to prices, if the prices are high, Government and communities must benefit, if prices are low, mines must not be penalised,” he said. The deputy minister said there was also need to consolidate the numerous fragmented taxes with collections distributed to various areas by central Government.
“These are the issues that we are discussing to improve fairness and equitable distribution. Taxation must be easy to understand and implement,” he said. The taxation system must also be easy to interpret, he added. A state of the industry report for the mining sector, based on a study by the Chamber of Mines of Zimbabwe and released by the mining lobby in December last year said mining companies were of the view that the current fiscal regime for the mining sector was suboptimal and should be reviewed.
All the mining companies also considered the current non-deductibility of royalties as undermining the competitiveness of the industry. The mining houses are also of the view that the tax heads are many and should be streamlined.
Mining is strategic to the Zimbabwe economy, as it generates 60 percent of the country’s annual foreign exchange earnings and accounts for 12 to 16 percent of GDP.