Zambia won’t reintorduce windfall tax

Zambia said on Tuesday it will not reintroduce the controversial windfall tax it applied when copper prices rose last year, despite the current rally in metals prices.

According to Reuters, the introduction of a 25 percent windfall tax and other taxes in 2008 was backed by the World Bank to help Zambia raise funds required to build schools, roads and provide health and education services in the southern African country. Mines and minerals development minister Maxwell Mwale said the government would not reintroduce the tax, which was scrapped in January, as it could scare away foreign investors. “We believe that the government policies should not be determined by short term conditions such as the price of copper,” Mwale told Reuters, a week after the Chamber of Mines of Zambia said investors wanted stable policies in mining. “We realised that windfall tax was an addition to the cost of production and that it was discouraging investment,” he said. Mwale said following increased production by many copper producers, most of the estimated 12,000 employees who lost their jobs because after the fall in the prices of metals in 2008 could be re-employed. Zambia said two weeks ago it will not refund foreign mining coIn a bid to boost foreign mine investment, Zambia said on Tuesday it will not reintroduce the controversial windfall tax it applied when copper prices rose last year, despite the current rally in metals prices. The introduction of a 25 percent windfall tax and other taxes in 2008 was backed by the World Bank to help Zambia raise funds required to build schools, roads and provide health and education services in the southern African country. Mines and minerals development minister Maxwell Mwale said the government would not reintroduce the tax, which was scrapped in January, as it could scare away foreign investors. “We believe that the government policies should not be determined by short term conditions such as the price of copper,” Mwale told Reuters, a week after the Chamber of Mines of Zambia said investors wanted stable policies in mining. “We realised that windfall tax was an addition to the cost of production and that it was discouraging investment,” he said. Mwale said following increased production by many copper producers, most of the estimated 12,000 employees who lost their jobs because after the fall in the prices of metals in 2008 could be re-employed. Zambia said two weeks ago it will not refund foreign mining companies the millions of dollars they paid in taxes when the controversial tax was in force, but could revise existing taxes. Last year, Zambia introduced a 15 percent profit variable tax, 25 percent mineral windfall tax and raised corporate tax to 30 percent from 25 percent and mineral royalty to 3.0 percent from 0.6 percent, upsetting foreign mining firms. Copper mining is Zambia’s economic mainstay and the mines are a major employer for many of its 12 million people.mpanies the millions of dollars they paid in taxes when the controversial tax was in force, but could revise existing taxes. Last year, Zambia introduced a 15 percent profit variable tax, 25 percent mineral windfall tax and raised corporate tax to 30 percent from 25 percent and mineral royalty to 3.0 percent from 0.6 percent, upsetting foreign mining firms. Copper mining is Zambia’s economic mainstay and the mines are a major employer for many of its 12 million people.

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