Source: Zim mulls new mining tax – DailyNews Live January 10, 2017
HARARE – 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.
COMMENTS