News / National
Zimbabwe mulls new mining tax
10 Jan 2017 at 01:24hrs | Views
Zimbabwe is planning to introduce a new mining tax this year aimed at boosting the country's depleting revenue streams, businessdaily has established.
Finance minister Patrick Chinamasa said the country has engaged an unnamed tariff consultancy firm from Norway to come up with the new tax regime.
"Mining is one of the most opaque sectors in the country and we have been working with a Norwegian company since 2013 to come up with a new mining regime and we hope to have completed it by the end of this year," he said.
Chinamasa admitted that the country lacks the sophistication and resources to adequately monitor all mining companies and this was resulting in less money coming to treasury through taxes.
Industry experts, however, assert that the new regime could effectively spell doom for mining firms that are currently struggling with high production costs, low metal prices and high taxes among other things.
Zimbabwe became one of the most expensive countries to mine, with an estimated 60 percent of every dollar earned in revenue going to government after a shock levy hike in 2012 which saw some fees going up by as much as 5 000 percent.
Under the existing laws, mining companies pay unit taxes to district councils, a number of taxes to different statutory bodies such as the Environmental Management Agency, Radiation Authority of Zimbabwe and Zimbabwe Revenue Authority.
The latest development also comes at a time when the new Mines and Minerals Amendment Bill is seeking to bar resources firms listed on foreign stock exchanges from acquiring mining rights in Zimbabwe.
The Bill also proposes to make it difficult for investors holding mining titles in the country to dispose of stocks to foreigners without government approval.
Gazetted in August last year, the Bill sets tough conditions for the exportation of raw minerals and proposes up to 20 years' imprisonment for investors who violate its provisions.
Once the Mines minister has approved the acquisition of shares in a domestic counter by a publicly-listed mining company with a majority of securities quoted on foreign bourses, 85 percent of funding raised would have to be invested in Zimbabwean mines.
Penalties meted on violators would include fines equivalent to the value of funds raised.
This means if a company raises $50 million but violates the law, a penalty of $50 million would be charged against the investor.
The Bill also allows government to deny mining rights or title to a public company unless the majority of its shares are listed on a securities exchange in Zimbabwe.
"Any company that requires a mining right or title which is listed on (a) foreign exchange shall be obliged to notify the minister of such listing, and 85 per centum of funds raised from such listing shall be used solely for the development of mining rights and title in Zimbabwe," reads part of the Bill.
"The minister shall be entitled to cancel any mining right or title once it is proven that any person has falsified information.
Any person who fails to comply shall be guilty of an offence and liable to a fine equivalent to 100 per centum of cash raised at the foreign listing or imprisonment for a period not exceeding 10 years or both fine and such imprisonment," it also reads in part.
The Bill also obligates mining rights holders to conduct business with domestic financial institutions.
"Every holder of a mining right or title shall, when conducting financial transactions relating to its mining activities, utilise financial institutions registered to practice as such in Zimbabwe. Any person who contravenes shall be guilty of an offence and liable to a fine not exceeding level 14 or to imprisonment for a period not exceeding 20 years or to both such fine and such imprisonment," the Bill adds.
It also sets tough conditions on shareholder changes in the mining industry. The minister of Mines would have to approve such changes in shareholding.
"No shareholder of a company holding a mining title shall sell, dispose of or transfer a Zimbabwe registered security to a non-indigenous person without the written approval of the minister," it says.
The clause appears to be a response to several deals that have been concluded by foreign firms, but appear to have failed to benefit the country.
Finance minister Patrick Chinamasa said the country has engaged an unnamed tariff consultancy firm from Norway to come up with the new tax regime.
"Mining is one of the most opaque sectors in the country and we have been working with a Norwegian company since 2013 to come up with a new mining regime and we hope to have completed it by the end of this year," he said.
Chinamasa admitted that the country lacks the sophistication and resources to adequately monitor all mining companies and this was resulting in less money coming to treasury through taxes.
Industry experts, however, assert that the new regime could effectively spell doom for mining firms that are currently struggling with high production costs, low metal prices and high taxes among other things.
Zimbabwe became one of the most expensive countries to mine, with an estimated 60 percent of every dollar earned in revenue going to government after a shock levy hike in 2012 which saw some fees going up by as much as 5 000 percent.
Under the existing laws, mining companies pay unit taxes to district councils, a number of taxes to different statutory bodies such as the Environmental Management Agency, Radiation Authority of Zimbabwe and Zimbabwe Revenue Authority.
The latest development also comes at a time when the new Mines and Minerals Amendment Bill is seeking to bar resources firms listed on foreign stock exchanges from acquiring mining rights in Zimbabwe.
The Bill also proposes to make it difficult for investors holding mining titles in the country to dispose of stocks to foreigners without government approval.
Gazetted in August last year, the Bill sets tough conditions for the exportation of raw minerals and proposes up to 20 years' imprisonment for investors who violate its provisions.
Once the Mines minister has approved the acquisition of shares in a domestic counter by a publicly-listed mining company with a majority of securities quoted on foreign bourses, 85 percent of funding raised would have to be invested in Zimbabwean mines.
Penalties meted on violators would include fines equivalent to the value of funds raised.
This means if a company raises $50 million but violates the law, a penalty of $50 million would be charged against the investor.
The Bill also allows government to deny mining rights or title to a public company unless the majority of its shares are listed on a securities exchange in Zimbabwe.
"Any company that requires a mining right or title which is listed on (a) foreign exchange shall be obliged to notify the minister of such listing, and 85 per centum of funds raised from such listing shall be used solely for the development of mining rights and title in Zimbabwe," reads part of the Bill.
"The minister shall be entitled to cancel any mining right or title once it is proven that any person has falsified information.
Any person who fails to comply shall be guilty of an offence and liable to a fine equivalent to 100 per centum of cash raised at the foreign listing or imprisonment for a period not exceeding 10 years or both fine and such imprisonment," it also reads in part.
The Bill also obligates mining rights holders to conduct business with domestic financial institutions.
"Every holder of a mining right or title shall, when conducting financial transactions relating to its mining activities, utilise financial institutions registered to practice as such in Zimbabwe. Any person who contravenes shall be guilty of an offence and liable to a fine not exceeding level 14 or to imprisonment for a period not exceeding 20 years or to both such fine and such imprisonment," the Bill adds.
It also sets tough conditions on shareholder changes in the mining industry. The minister of Mines would have to approve such changes in shareholding.
"No shareholder of a company holding a mining title shall sell, dispose of or transfer a Zimbabwe registered security to a non-indigenous person without the written approval of the minister," it says.
The clause appears to be a response to several deals that have been concluded by foreign firms, but appear to have failed to benefit the country.
Source - dailynews
