Zim fiscal law change not 'conducive', says Chidhakwa

Published: 04 February 2014

Zimbabwe is likely to revoke the recent amendment to fiscal law that stops mining companies from claiming royalties for tax purposes.

The move to prohibit mining companies from claiming royalties for tax purposes is seen as likely dissuading potential foreign investors into the mining sector.

During the presentation of the 2014 National Budget in December last year Finance Minister Patrick Chinamasa said the Government had determined an amendment to making mining royalties non-deductible for income tax purposes.

However, according to miningmx, Mines and Mining Development Minister Walter Chidhakwa told a panel at the ongoing Mining Indaba in South Africa that the abstraction of tax deductibility would have a negative impact on attracting new investment in the sector.

"Tax deductibility was a major policy decision. I had a discussion with the Minister of Finance (Patrick Chinamasa), and hope that the matter will be dealt with," said Chidhakwa.

"It doesn’t promote the mining sector."

Minister Chinamasa is seen as flexible to reviewing the mining sector's tax regime, consistent with indications he gave during the presentation of the 2014 National Budget: "The mining sector proposed review of the mining tax regime in order to promote investment and facilitate exploitation of low grade ores.

"Treasury will be undertaking a comprehensive review of the fiscal mining regime, with a view to ensure a balance between the viability of the mining industry and revenue inflows to the fiscus," he said at the time.

World Bank studies show that Zimbabwe requires investment requirements in excess of US$12 billion into existing projects and known deposits.

If such investment is acquired, the country's mining sector could generate over 56 000 jobs and significant growth in exports.
- BH24