Oct. 30 (Bloomberg) -- Zambia, Africa’s biggest copper producer, must consider its revenue requirements when determining tax policy for the mining industry, Finance Minister Alexander Chikwanda said.
“The taxation arrangement must take into account the country’s revenue needs, but also the viability of the mines,” Chikwanda told reporters today in Lusaka, the capital.
Lower than expected revenue collection contributed to the sharp deterioration in Zambia’s finances that led Fitch Ratings to cut its rating on the country’s debt this week. The government has resisted calls for a windfall tax on mining companies based on revenue instead of profit.
Chikwanda said mining companies should pay tax “whether they have made profit or not,” the Lusaka-based Post newspaper reported today, citing comments made in a parliamentary committee meeting.
He declined to comment on whether he supports a windfall tax, which a parliamentary committee last proposed in December 2011. The country is losing as much as $2 billion a year in revenues because of tax avoidance from mining companies, Miles Sampa, then deputy finance minister, said in November.
There must be a “critical examination of all the variables” in formulating mining tax policy, Chikwanda said. Mining accounts for more than 70 percent of Zambia’s export earnings.
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