The Value Added Tax – VAT refunds to the mining and quarrying sector reached almost K1.2 billion (about US$45 million) for the month of April 2024, a situation that resulted into about 70% of the tax revenue collected from the sector through mining company income tax and mineral royalty being claimed back by the mining firms.
According to the Zambia Revenue Authority – ZRA report seen by the Zambian Business Times – ZBT, the mining and quarrying sector were refunded a total of K1.2 billion, accounting for almost 90% of all the refunds made to all sectors in Zambia.
The Zambian government has been accused of over standing its hand in giving mining incentives that has seen mineral royalty tax being allowed for tax deduction on overall income tax due. This is further to the above incentive that allows mining firms to claim VAT refund for all goods and services.
But the Chamber of mines, a body that represents key mining firms in Zambia has argued that the incentives to the mining industry are needed to attract more investments into the sector as well as make Zambia more attractive and competitive as a mining investment destination. Copper production in the last two years has slumped, the the coming back on stream of Mopani is expected to boost production by about 250,000 tons per annum at peak production levels.
The challenge for the country however remains with its over-dependance on Copper mining. With copper export accounting for over 70% of total exports for Zambia, there is more pressure on the government to negotiate and collect more from the sector to raise funds to then apply in diversifying the economy and well as ensure the proceeds are remitted back into the country to help stabilise the local currency – the Kwacha which has been on a perpetual depreciation streak.
A further review by ZBT showed that for the month of April 2024, ZRA collected about K1 billion from mining company tax and a further K790 million from mineral royalties, with the total April collections hitting about K1.8 billion (about US$70 million). ZRA then paid out a total of K1.2 billion, leaving the effective net collections from the mining sector at only K600 million (about US$23 million).
