How Zambia loses $2.8 bn in mineral taxes

Tue, 27 Jun 2017 13:01:04 +0000

By BUUMBA CHIMBULU

FAILURE to amend the 2015 Mines and Minerals Development Act has resulted in Zambia lagging behind in aligning its national laws and regulations to the Africa Mining Vision (AMV).

The Centre for Trade Policy and Development (CTPD acting executive director, Isaac Mwaipopo, said the recent study conducted by the Tax Justice Network Africa, in partnership with CTPD, focusing on progress made towards domesticating recommendation contained in the Continental Mining Vision, indicated that Zambia was lagging behind other major mineral dependent African economies in aligning its national laws and regulations to the AMV.

“The absence of clear policies and systems to curb mining companies’ practice of declaring the bulk of their investments as debt, and not equity, is eroding the country’s tax base. These gaps contribute to the high levels of Illicit Financial Flows (IFFs) from Zambia, which is currently estimated at about US$2.8 billion per annum,” he said.

Mr Mwaipopo said in a statement that Zambia could improve on such cases by amending the 2015 Mines and Minerals Development Act which would then facilitate for the reinstatement of a Mineral Revenue Sharing Mechanism (MRSM).

He explained that this was critical if the country was to realize the aspirations of the recently launched 7th National Development Plan that seeks not to leave any one behind.

Mr Mwaipopo said the report also indicated that Zambia’s Bilateral Investment Treaties (BITs) and Double Tax Agreements (DTAs) were riddled with loopholes which contributed to the country’s inability to raise adequate domestic revenue from its vast mineral wealth to improve the quality of life of citizens.

“It is disheartening to note that at the mention of mining in Zambia, the focus and conversation among policy makers is predominantly on how to create an enabling environment for investors with less attention paid to discussions on how communities that host the mining investments can benefit and equally live in a conducive environment,’’ Mr Mwaipopo said.

He noted that the amendment to the 2015 Mines and Minerals Act which would facilitate for the inclusion of the MRSM would enhance opportunities for communities that hosted mining investments to benefit from their extraction.