By BUUMBA CHIMBULU
ZAMBIA is expected to record a minimum investment of US$2 billion this year following the reintroduction of deductibility of mineral royalty tax on copper by the Government in the 2022 national budget.
The decision has been made to align mineral royalties with international practice and is envisaged to attract more investment, according to the Centre for Trade Policy and Development (CTPD) Head of Research, Boyd Muleya.
According to Mr Muleya, the decision was also meant to increase copper production beyond 800,000 metric tonnes annually.
He however observed that the reintroduction of the deductibility of mineral royalties for corporate income tax computation had been contentious, as seen from mixed feelings among citizens.
“The reintroduction of deductibility of mineral royalty tax on copper is expected to bring a minimum investment of US$2 billion in 2022. The decision will however see a government revenue loss of US$182 million (K3.2 billion),” Mr Muleya said in his reflections on the 2021 economic performance.
He indicated that copper prices would remain buoyant in 2022, giving a greater opportunity to grow Zambia’s revenues from the mining sector.
Mr Muleya however emphasised that this called for institution of structural realignments such as a stable and efficient mine tax regime.
Meanwhile, Mr Muleya warned that both the cost of living and that of doing business were expected to rise further due to inflationary pressures coming from the global markets and possibility of poor farming season due to erratic rains.
This, he explained, would also come from increase in fuel prices and electricity tariffs, and payment to pensioners and many other government interventions to spur liquidity in the economy, among others.
Mr Muleya further said CTPD expected tighter monetary policy rate in the first quarter of 2022 to contain inflationary pressures as highlighted.
“Cost reflective fuel prices imply that with global oil prices surging, coupled with a volatile Kwacha will heavily weigh down on the local pump prices in 2022. Hence the need to support the Kwacha by all means,” he stated.
