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Zambia: Chamber of mines calls for mineral royalty reliefs

The Chamber of Mines has welcomed the removal of some of the provisions of SI 90 relating to claim of VAT on imported spare parts and lubricants and the suspension of import duties on the importation of concentrates in the mining sector aimed at combating the effects of COVID-19.

Finance Minister Dr. Bwalya Nga’ndu had on March 27, 2020, announced that in order to relief businesses in the wake of the COVID – 19 outbreak, the government will remove provisions of SI 90 relating to claim of VAT on imported spare parts, lubricants and stationery to ease pressure on companies.

The government further suspended import duties on the importation of concentrates in the mining sector to ease pressure on the sector and also suspend the export duty on precious metals and crocodile skin.

And the mining Chamber’s Chief Executive Officer Sokwani Chilembo told the Zambian Business Times – ZBT that the pronouncement by Finance Minister is a first step in the direction that must lead to a broader relief package similar to that being deployed by other countries facing the Coronavirus pandemic.

Sokwani added that the removal of SI 90 VAT claim limits needs to include Fuel and power in light of unforeseen expenditures on COVID -19 health measures and the reduced revenues due to the copper price drop.

He further said the smelting and refining businesses that are still operating do hope to benefit from bringing the smelting and refining revenue streams back online though at a low margin.

“The core local mining and processing that makes up the bulk of the industry will still need more relief to deal with the numerous unforeseen COVID – 19 related challenges,” He added

The Chamber has since submitted a range of administrative measure proposals to help ease up enough cash flow to deal with the COVID – 19 emergency and a range of secondary tax relief measures to indirectly stimulate the industry via it becoming able to afford the cost of capital to sustain operations going forward.

He disclosed that the measures include Mineral Royalty Rate and deductibility relief, the start of VAT refunds by offset, reduction of duties on capital equipment and restoration of capital allowances to 100%.

“However we are confident that with the above measures in place, COVID – 19 related production loss and price erosion can be at least partially ameliorated with multilateral and cooperating partner assistance to government until the pandemic abates,” He added.

The Zambian government however has to walk a tight rope on these tax and non tax incentives being sought as the government also requires revenue to fund public services such as education, health and its massive transport infrastructure investments.

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