The Ministry of Finance and Economic Development is proposing measures that will see half of the mining royalties being paid in minerals to store value as well as get the real tax value.
Anerudo Mapuranga
There are fears that mining companies have been understating the real sales they would have made from minerals thereby fleecing the country of the much-needed foreign currency. The government, therefore, might be attempting to get its maximum tax by collecting revenue in minerals.
In a letter written to the Ministry of Mines and Mining Development, Permanent Secretary in the Ministry of Finance George Guvamatanga said the Finance Ministry is proposing to get part of the revenue in minerals because they carry no credit or counterparty risks.
“The Treasury is concerned that the country does not have reserves of the minerals, which ‘serve as a source of trust in a country given that they carry no credit or counterparty risks,” Secretary for Finance George Guvamatanga said.
Deputy Minister of Mines and Mining Development Hon Dr Polite Kambamura said the idea by the government was to get the maximum benefit from mineral taxes.
“The whole idea by the Ministry of Finance is that they want to store value of our royalty,” Dr Kambamura said.
Mineral royalties are one of the oldest forms of mining taxation and were initially introduced to extract economic rents from mining. Over time, the royalty regime has become more complex as it was identified as an important policy instrument that can achieve more multi-faceted outcomes.