Tax Incentives for the Mining Sector

Amb. Emmanuel Mwamba wrote;

During his appearance on Hot Seat on Hot FM, Chief Government Spokesperson Cornelius Mweetwa claimed that his government has never given any tax or other incentives to the mining sector.

Off course this is a terrible and shameless lie by Hon. Mweetwa.

In his first budget address in 2021 Finance and National Planning Minister, Dr. Situmbeko Musokotwane,abolished the non-deductible mineral royalty tax  that was earning government $1.1billion every year from the sector since it was introduced in 2019.

Further mining development agreements have been signed with Government for First Quantum Minerals (FQM) and others that have provided detailed exemptions on taxes, fees, tarrifs and in some cases electricity tariffs.

Let’s tabulate other incentives that the mining sector enjoy since September 2021.

●accelerated depreciation on capital equipment.

●duty-free importation of machinery,
●extended tax loss carry forward periods (up to 10 years),

●zero-rated export tax on mining products.

●input tax claims for exploration companies,

●higher capital allowance percentage compared to other sectors, essentially allowing for faster write-off of investments on mining equipment.

●Reduced corporate tax rates for mining companies.

●Accelerated depreciation on capital equipment and machinery.

●Deductibility of mineral royalties for corporate income tax calculations.

●Extended tax loss carry forward period specifically for mining companies.

●Import duty exemptions:

●Duty-free importation of capital equipment and utility vehicles used in mining operations.

Other incentives:

●Investment guarantees and protection against nationalization

●Facilitation for acquiring licenses, immigration permits, and land

●Input tax claim on pre-production exploration costs.

●Guaranteed input tax claim for ten years on pre-production
expenditure for exploration companies in the mining sector.

●Interest on which a deduction is not allowed (in excess of
threshold) may be treated as incurred during the next
charge year and carried forward for a period of ten years.

●Tax losses shall be deducted from 50% of the income of the
person from the mining operation provided that the losses shall
not be carried forward beyond 10 subsequent charge years
after the charge year in which the loss is incurred;

●Any mining company holding a mining license carrying on the
mining of base metals is taxed at 30%.
●Dividends paid by a mining company holding a mining license
and carrying on mining operations is taxed at 0%.

●20% mining deduction on capital expenditure on buildings, rail
way lines, equipment, shaft sinking or any similar works.