HARARE – The mining industry has commended government’s efforts to review the country’s mining tax system in line with international price fluctuations.
This was after the Zimbabwe Revenue Authority (Zimra) last week said there was need to redesign the mining taxation regime in a bid to enhance mine operations, reduce job cuts and increase revenue from the sector when metal prices rise.
“Zimra holds the view that the tax regime for miners must be reviewed,” the national tax collector’s chairperson Willia Bonyongwe said.
“It continues to call on government to find a fairer way of taxing the mining sector so that the country, communities and mining companies can all benefit equitably from the finite minerals resources,” she added.
In the three months to March this year, Zimra collected royalties worth $9 million against a $24,5 million target, which saw the revenue head record a 45,3 percent negative variance.
Platinum and gold representatives told the businessdaily at the Chamber of Mines annual conference in Victoria Falls last week that a mining tax review was “long-overdue and welcome.”
Gold Producers Association chairman Noah Matimba said miners were in full support of the move.
“Naturally, taxes should reflect conditions on the ground so if remittances can then be tied and matched to international market prices, gold miners will be grateful,” Matimba said.
Platinum Producers Association chairman Winston Chitando said platinum miners await a favourable decision regarding a flexible tax regime.
“Given the volatile international prices, news that government could even consider reviewing the tax system to ease the load on miners so that royalty obligations can be met is a very welcome development,” Chitando said.
Meanwhile, Bonyongwe said the mining revenue head’s future performance should be subject to mineral prices and local production levels, adding that royalties were also going to be subject to the mining fiscal regime.
Mining royalties are charged based on the face value of the invoice with diamond miners expected to cede 15 percent of their profit to the taxman. Other precious stones surrender 10 percent, gold has a seven percent royalties charge as platinum miners deliver 10 percent to Zimra.
Other precious minerals owe the taxman four percent when they are done with their business as base metals remit two percent, same as coal bed methane and industrial metals while coal attracts a one percent royalty fee.
Neighbouring Zambia recently adopted a new price-based mineral royalty tax system, which will enhance the collection of government revenue rather than compromise it. This was after miners had asked for a price-based royalty structure to ease the tax burden during a period of depressed prices.