VAT on mining equipment suspended
By CHARLES MUSONDAGOVERNMENT has suspended value added tax (VAT) on equipment imported by mining companies that have not yet started production.
Minister of Finance and National Planning, Ng’andu Magande disclosed this in an interview in Lusaka yesterday.
“We have deferred the payment of VAT on new equipment until these mines start making money,” Mr Magande said.
And Mr Magande has castigated Australia’s Luiri Gold chief executive officer, Mike Sperink, for claiming that Government did not handle the issue of the new mine tax regime properly.
In a story posted on the internet yesterday, Mr Sperink was quoted as having told delegates at the Africa Mining Congress 2008 in Johannesburg that the Zambian government made little consultation with the mines before introducing the new fiscal regime.
Luiri has a gold and iron ore prospect in Zambia.
Mr Sperink said shares in the exploration company fell steeply on the fiscal changes the government introduced to generate higher income from the mining sector.
But Mr Magande wondered what kind of consultation Mr Sperink wanted Government to have with the mining industry.
He explained that since the mines did not negotiate development agreements with Government as a group, some of them felt the State was favouring others in terms of incentives.
“Government then decided to do the same thing to everyone and that is how we decided to introduce the new tax regime to apply to all of them,” Mr Magande said.
He said before implementing the new regime, Government invited mining firms to discuss the issues they wanted addressed.
“Those who were interested came and we explained to them individually since each one of them had different parameters of negotiating the development agreements and investing in Zambia,” he said.
Mr Magande said any mine that had difficulties with the tax regime must approach Government but reiterated that Government could not negotiate taxes with taxpayers when introducing new taxes.
“Government is a shareholder in these mines and we cannot introduce a new tax regime that will kill our own companies,” he said.
Mr Magande wondered why Mr Sperink was complaining because his company was not affected by the new regime as it was still exploring and had not yet started producing.
He said windfall tax applied to mines that were selling their produce above a certain price and that corporate tax was charged on surplus income after a company recouped its expenditure.
Meanwhile, Mr Magande has commended Celtel Zambia for supplementing Government’s efforts to improve education standards in the country.
He said this when he received 100 desks and learning materials that Celtel donated to Chilanga Basic School.
Mr Magande is member of Parliament for Chilanga.
“Zambia, like any other country, needs an educated society that will understand and effectively execute development programmes and projects,” he said.
Earlier, Celtel Africa chief executive officer, Chris Gabriel, said his company was proud of its corporate social responsibility and that giving back to the community was high on the firm’s agenda.
And Celtel Zambia managing director, David Venn said apart from donating desks, his company would rehabilitate the school and the total cost amounted to K200 million under the “Build Our Nation” project.
He said Celtel was part of the community it operated in and that the company had so far employed 750 Zambians.
“This is one example of Celtel making life better,” Mr Venn said.
[Zambia Daily Mail]
