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Zambia will not re-introduce windfall tax

Zambian finance
minister Situmbeko
Lusaka, Zambia — MININGREVIEW.COM — 15 October 2010 – The government of Zambia has confirmed that it will not re-introduce the controversial mining windfall tax, despite a public outcry about its low revenue from the mining industry.

In 2008, Africa’s top copper producer introduced a 25% windfall tax on revenue, but scrapped it last year, saying it could have led to the closure of some mines.

“We have to rely on the normal corporate tax. We checked this, and there is no other country in the world which charges tax on revenue,” finance minister Situmbeko Musokotwane said.

He was addressing members of the Zambian business community, who said they were disappointed that the government did not re-introduce the mining windfall tax in the 2011 budget.

Musokotwane said some mining companies were not paying tax because they were still covering their losses, but that the government expected the mines to start paying tax earlier than originally estimated due to high copper prices.

Canada’s First Quantum Minerals initially said it would have to cover losses for eight years, but the period has been reduced to two years due to rising copper prices, he added.

Other foreign mining companies operating in Zambia include Canadian and Australian-listed Equinox Minerals Limited, Glencore International AG of Switzerland and Metorex of South Africa.