GOVERNMENT has approved the drafting of a new tax regime in mining sector it hopes will help bring investment into the cash-starved sector and plans to overhaul the country’s income tax laws as well, finance minister Patrick Chinamasa said on Monday.
Zimbabwe became one of the most expensive countries to mine, with an estimated 60 percent of every dollar earned in revenue going to government after a shock levy hike in 2012 which saw some fees going up by as much as 5,000 percent.
Under the existing laws, mining companies pay unit taxes to district councils, a number of taxes to different statutory bodies such as the Environmental Management Agency, Radiation Authority of Zimbabwe and Zimbabwe Revenue Authority and Chinamasa has previously indicated that government would offer incentives such as lower taxes or royalties to companies willing to add value to local minerals.
Mining has overtaken agriculture as the key driver of Zimbabwe’s economy, accounting for nearly 60 percents of exports.
Chinamasa told a press briefing after the announcement of new Zimbabwe Revenue Authority board that Cabinet had approved the drafting of the new laws.
“Treasury is working on two pieces of legislation. A mining fiscal tax regime – we want to come up with new mining tax regime and I’m happy to announce that the principles of the legislation were approved by Cabinet last Tuesday,” Chinamasa said.
“I want to come up with a mining tax regime that is fair to everyone- to the state and to the investor that brings about a win-win outcome. I believe we do not have one right now. I also want it to be simple and straight forward. At the moment it’s a very complex legislation which makes it very difficult to administer.”
He said treasury would also revise the Income Tax Bill after President Robert Mugabe declined to sign the one that was passed by Parliament into law after concerns were raised.
Zimra commissioner-general Gershem Pasi said the tax collector would engage companies to recover the over $1 billion owed in unpaid taxes. This year, Zimra has targeted to collect $4,1 billion revenue against expected expenditure of $4,115 billion.
“We are saying to those who owe, let’s have a dialogue. Be open and sincere with us. Let’s see your cash flows and let’s agree on a win-win situation where we allow you to operate but you also meet your obligations,” Pasi said.
“Right now it would be really foolhardy to think that companies can pay the money in a single call. So we will have terms which we will agree to with all who owe. All we are seeking is sincerity on both parties then we can have a win-win situation.”
Economist and businesswoman Willia Bonyongwe will chair the Zimra board and will be deputized by urban planner Percy Toriro. Other board members include, finance secretary Willard Manungo, former Zimra deputy commissioner of taxes Betty Katiyo, economist Arnold Chidhakwa, lawyer Sarudzai Njerere, statistician Moffat Nyoni and accountant Nompumelelo Abu-Basutu.
The previous board was chaired by lawyer Sternford Moyo. – The Source/Bernard Mpofu