via Mining, income tax drafts approved – DailyNews Live 2 July 2015
HARARE – Finance minister Patrick Chinamasa says Cabinet has approved new mining and income tax drafts aimed at enhancing transparency in revenue collection.
“Treasury is working on two pieces of legislation. A mining fiscal tax regime — we want to come up with a new mining tax regime and I’m happy to announce that the principles of the legislation were approved by Cabinet last Tuesday,” Chinamasa told journalists on Monday.
“I want to come up with a mining tax regime that is fair to everyone — to the State and to the investor that brings about a win-win outcome. I believe we do not have one right now. I also want it to be simple and straight forward. At the moment it’s a very complex legislation which makes it very difficult to administer,” he said.
In his 2015 National Budget presentation, Chinamasa noted that the mining fiscal model would enable government to design an appropriate tax system that attracts investment into the mining sector and promotes optimal mineral extraction and revenue generation, without sterilising minerals, that is, extraction of high grade ores, at the expense of less economic grades.
Under the current mining laws, companies in the mining sector pay a number of taxes to different statutory bodies such as the Local Government authorities, Environmental Management Agency, Radiation Authority of Zimbabwe and Zimbabwe Revenue Authority (Zimra).
However, under the proposed system, mining houses will be compelled to provide data to tax collector Zimbabwe Revenue Authority such as exploration costs, pre and post-operative costs, debt-equity mix and repayment terms in a prescribed format.
“The effectiveness of the mine fiscal model is dependent on the availability of quality data from the mining sector. The availability of data will ensure transparency of the mining operations,” said Chinamasa.