, pub-3787448768440954, DIRECT, f08c47fec0942fa0 [google-translator]

Zim miners solicit US$ tax exemption

By Business Reporter

MINERS’ representative body, the Chamber of Mines of Zimbabwe (CoMZ), has asked the government to charge taxes, royalties and for electricity bills among other statutory obligations in the Zimbabwean dollar (ZWL), saying paying in United States dollars (US$) is piling pressure on mining players’ operations.
Economist Pardon Chitsuro told stakeholders attending the Association of Mine Managers Zimbabwe (AMMZ) in Kariba recently, that paying the bills in US$ had left miners with inadequate funds.
“We continue to be squeezed by requirements to pay taxes and other statutory obligations in foreign currency. Over and above that, there is also another portion of foreign currency that is surrendered to the government.
“Because of these surrender requirements, mining companies have been losing value. Our computation shows us that mining companies are losing part of their earnings in US$. If you do the maths, it means companies are losing at least 20 percent of earnings, which is some kind of tax technically,” Chitsuro said.
As part of the 2022 budget submissions, Chitsuro said the CoMZ has pleaded with the authorities to allow mining firms to pay the bills using the local currency.

“What the Chamber of Mines has done is to engage the ministry of Finance and Economic Development and the Reserve Bank of Zimbabwe.

“We have been appealing to authorities to allow mining companies to pay taxes and electricity bills using the 40 percent that is taken by the government. This would then free up foreign currency to import critical raw materials for mining companies.
“We are also appealing to authorities to provide an incentive for the 40 percent that is surrendered to the government so that mining companies can be cushioned against the disparities on the black market rate and the official exchange rate,” he said.
Apart from foreign currency issues, Chitsuro said mining companies continue to face a huge challenge of power, capital shortages and a high-cost structure.
“With regards to power shortages, we have been engaging the government with a view of making sure the mining sector is prioritised in terms of power supply,” he added.
Early this year, the RBZ scrapped the compulsory requirement to liquidate all unutilized export proceeds after 60 days and increased the export surrender requirement from 30 to 40 percent on all export receipts, with effect from January 7, 2021.
Miners in need of foreign currency can apply through the RBZ foreign currency auction system.
Apart from this, the government has also introduced a slew of incentives for miners to raise foreign currency to fund operations, including the introduction of the Victoria Falls Stock Exchange to allow them to raise capital to fund projects and exploration ventures.
Speaking at the same event, outgoing AMMZ president Coburn Katanda said the regulations governing the mining sector were outdated, as most of the statutes were promulgated in 1989 and 1990, with authorities only making numerous amendments since then.
“We have got input from stakeholders in the sector and we have now compiled a document, which has been presented to the ministry of Mines and Mining Development unofficially, and we are awaiting an official meeting and discussion on how to see it through to the end.
“This is because we do not want to present a document today and then end it there. We want to see this through to the end so that the input we received is reflected in our regulations,” he said.
Katanda added that the need to review the regulations stems from the observation that the current technological advancements and current trends in the mining sector must be put into consideration.
“Once completed, the new set of regulations will undoubtedly create an enabling environment for the efficient operations of mines. If mines operate efficiently and at full capacity, then the US$12 billion mining industry by 2023 target can be easily attained,” he added.
Katanda said there is need to speed up the process of reviewing the current mining regulations and unlock more value from the sector.
AMMZ was formed in 1972 and is an affiliate of the CoMZ. .  ENDS//

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