The Association of Mine Suppliers and Contractors (AMSC) says the 2019 budget is a progressive document which will ensure that citizens benefit from the extractive industry through policy changes pronounced.
In a statement, Association president Augustine Mubanga expressed joy at the upward adjustment to the mineral royalty tax, transfer pricing and the introduction of sales tax.
“We take note with happiness the changes to the mineral royalty tax by increasing 1.5% on each sliding band and the 10% rate that will trigger at $7,500 and above. These changes will ensure that benefit in terms of tax collection is derived and ensure that the people of Zambia benefit from their resources. Most notably is the increase from 5% to 8% of Cobalt MRT, However, we think that Govt could have done more on this tax, considering the fact that cobalt MRT has not changed in a long time, a fair adjustment of 10 15% was going to ensure that maximum revenue collection is achieved. We would like to urge the Mining Houses to support this move especially that in the last 3-4years Government had ensured that the sector stabilizes from world economic stress of 2008, 2014 and 2015 By maintaining a constant tax regime. We hope that The Mine Houses will not use this increase as an excuse to deny Zambians business,” he stated.
“We further encourage these mine houses to even do more in supporting local suppliers and contractors to access even more opportunities. We note with great interest the intention by the Hon Minister to consider bringing the act to parliament for amendment. We have advocated for reforms in the mining sector as opposed to Nationalization. We feel that reforms such as mandatory listing of the Mines at LUSE will provide an opportunity to Zambians to own shares and participate directly into the running of the Mines, and also Govt can take advantage and increase its shareholding through ZCCM IH.”
He proposed that government regulates procurements in mining sector so that 40% was given to local Zambian owned supplier and contracting companies as a measure to increase revenue collection.
“We further propose that a regulated 40% of procurements in mining sector is given to local Zambian owned supplier and contracting companies. The mining sector spend between US$3billion to US$4.55illion annually this includes CAPEX, lf 40% is captured it will increase economic activities thereby increase contribution to the GDP and employment. The Mines have taken advantage of this gap to procure 80-90% of goods and services from outside. The marginalization the mines embarked on,on local companies denied business to them intentionally,this behavior can be restrained by putting up strigent laws that should protect the local suppliers and contractors. The measure taken of increasing the penalty fee for transfer pricing to K24million is a welcome and commendable move, but we must be aware of the fact that prosecuting incidences of Transfer Pricing Crimes are very difficult. The Association proposes that all selling contracts of copper should be done here in Zambia,” stated Mubanga.
“ZRA must be a witness to these agreements and registered with both 302 and ZRA, this can help ZRA and 302 forecast revenue well. Further all contracts of sale of Copper that have been done outside the country must still be registered locally. This can promote transparency and reduce suspicion. The association welcomes the introduction of sales Tax over VAT, this will enhance revenue collection from the Tax payer. However, as an association whose membership deals with the Mines and the issue of VAT is very prominent, we appeal to government to give enough time for changeover. This will enable companies to upgrade their software’s Manage the transition in terms of training. If the Tax payer is dealing in a variety of products that might attract different tax rates, the management of sales tax might be a challenge from the initial point.”