By SILUMESI MALUMO
SOCIALIST Party leader Fred M’membe has dared Parliamentarians to show their muscle and ensure that the Mineral Royalty Tax which is set to be done away with in 2022, is maintained to stop cheating in the mining sector.“Why such concessions? If Parliament has any spine, this is the time to show it,” he said.Dr M’membe said in an interview that the last 25 years, out of the eight major mining corporations that have operated in the country, only two companies have been paying Company Income Tax, meaning the rest have been declaring losses as tax authorities have no capacity to find loopholes in their tax declarations. He said base erosion and profit shifting seem to be very easy for these corporations. He said to maximise value from this sector, the Zambia Revenue Authority proposed the introduction of Mineral Royalty Tax to bring certain loss making companies on the tax base. “Mineral Royalty Tax is not a fee, it’s a tax. Currently it’s paid as final tax by both loss making and profit declaring mining corporations as a final tax. So it is net tax income to the Zambian people. “Why do mining corporations love income tax? Simple, transfer pricing and exaggeration of costs to declare lower taxable income.“Why do they hate MRT? It’s based on extracted minerals and easy to administer by ZRA and difficult to cheat,” Dr M’membe said.He said, “remember this, countries with deductible MRT and lower taxes in this industry have higher stakes or even controlling shares in private mining corporations. So they collect lower taxes and get dividends.He said in the case of Zambia, some mining companies are 100 percent privately owned.At the time when the copper prices are reasonably high, he said, the UPND government has proposed in the 2022 budget that MRT becomes a deductible tax, meaning whatever losses they make off Company Income Tax can be netted off MRT. He said this will make Zambia’s significant resource mobilisation loss making.Dr M’membe said in the end, the only benefits the country may get from the mining sector are only business and job opportunities and PAYE.He said this is a clear demonstration of surrendering the country’s sovereignty to capital and not the people. Dr M’membe indicated that Zambia is known as the second largest producer of copper in Africa, yet this sector has only been contributing an average 13 percent to the GDP before Covid-19 hit and around 25 percent after the pandemic hit the country due to disruptions in trade and global supply chain.
