Zim miners deny evading taxes

Zim miners deny evading taxes
Published: 24 June 2015
Zimbabwe mining companies say they are not evading taxes but distribute their earnings legitimately among various stakeholders in line with the country's laws.

Isaac Kwesu, the Zimbabwe Chamber of Mines chief executive, recently told delegates attending the Buy Zimbabwe Summit that miners last year remitted approximately 17 percent of mining industry revenue in taxes to government.

"Chamber of Mines statistics show that of the approximately $2 billion revenue generated by the mining sector in 2014, 39 percent was benefited by suppliers materials and consumables, 19 percent was benefited by workers in form of salaries and wages, 14 percent went to other operating expenditures, 17 percent was paid out to the government in form of taxes and other related charges while 11 percent represented average profit after tax (most of this figure was ploughed back as capital)," Kwesu said, arguing the sector's contribution to the fiscus was "very satisfactory".

From 2009-2013 the local mining sector contributed between nine to 13 percent of the total fiscal revenue against the international benchmark of between three to 20 percent.

This comes after government last week accused mining companies in the country of tax evasion due to debt financing of projects.

"Mining companies are not contributing to Treasury. Between 2009 and 2013 mining companies contributed six percent to the fiscus. This is unsatisfactory given the bullish commodity markets for the greater part of the review period," said Finance minister Patrick Chinamasa.

The Treasury boss added that mining export earnings were not commensurate with the remittances, and the country's reliance for foreign revenues on a narrow range of mineral exports was also affecting Treasury.

"The mining sector currently accounts for almost 60 percent of the country's export earnings.

"The growing export concentration on the mining sector increases the country's vulnerability to adverse commodity price swings," he said.

Zimbabwe's mining fiscal regime provides for tax concessions that are intended to attract investment as mining is highly capital-intensive.

Statistics from the Chamber of Mines show that the mining sector currently contributes 15 percent of nominal gross domestic product, 58 percent of total exports, an average of 11 percent of fiscal revenue and accounts for more than 45 000 jobs with more than 50 percent of Foreign Direct Investment.

For the past few years, mining companies operating in the country have come under intense pressure from government to set up refineries and value adds the mineral resources.
- dailynews
Tags: Zimbabwe, Tax,

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