The Zambia Revenue Authority – ZRA has clarified that it has not failed to meet its monthly collection target when it comes to collecting Mineral Royalty Tax – MRT from the mining industry.
This follows accusations that the tax authority has failed to hit its monthly MRT target which has resulted in continued Kwacha depreciation streaks that are a result of low inflows of copper export dollars in form of tax at a time when the international prices are at an all time high.
ZRA Corporate affairs manager Topsy Sikalinda said the authority has the annual target of collecting K97 billion in MRT by December 2022, which can only be confirmed when we reach December 2022. “We are only in March 2022 and we shall only be able to project whether we have met or not in December 2022,” he stated.
Speaking in an exclusive interview with the Zambian Business Times – ZBT, Sikalinda explained that Mineral Royalty Tax is only charged at the point of sale of the mineral, adding that where minerals are extracted but not yet sold, the tax point for the royalty would not have yet been reached.
Responding to a question from ZBT on what impact the provision to make MRT deductible on the overall revenues to be collected from the mining industry, Sikalinda stated that the Mineral Royalty Tax rates for 2021 and 2022 are the same, adding that what has changed is that the paid Mineral Royalty Tax will be an allowable expense on the tax return.
Sikalinda further disclosed that the Mineral Royalty Tax and Mining Company Income Tax revenue targets have respectively increased by 125.8% and 141% in 2022 as compared to 2021. He said the increase is largely on account of increased metal prices on the international market and the overall favourable outlook for the mining sector going forward.
He however said ZRA expects more investment in the sector leading to increased production which will eventually lead to more Mineral Royalty Tax, more Company Income Tax, More Pay As You Earn and more job creation. This is expected to lead to increased economic activity in the sector.
Collection of taxes from the mining industry which accounts for over 70% of Zambia’s export earnings has come under heavy criticism following the announcement by Finance Minister Situmbeko Musokotwane that Government has accepted to make MRT deductible from company income tax payments.
The move to make MRT income tax deductible is projected to result in revenue loss of about about US$200 million annually and about US$1 billion in five years. The finance minister further announced that the country would get to producing 3 million tones of copper per annum but no details or timeline milestones have been availed.
