The Zambia Chamber of Mines (ZCM) has made a submission to Ministry of Finance to withdraw the tax measure which limits Value Added Tax (VAT)claims on consumables insisting that it does not favour the mining industry.
The Chamber has therefore proposed to the Ministry to instead introduce a 90 percent blanket limitation on VAT claims on all inputs.
According to the submissions obtained by the Daily Nation, ZCM said the tax measure should be scrapped off entirely.
“This initiative should be scrapped entirely. The Chamber proposes that the measure to limit VAT claims on consumables to “stock in trade” be withdrawn and that instead a blanket limitation of VAT claims on all inputs to 90 percent be put in place,” the Chamber said.
ZCM said this would run alongside increased claim levels on limitation of claims of fuel and electricity as per the 2020 budget proposals of 70 percent and 80 percent respectively which chamber was open for discussions.
The Chamber said the mining, industry and commerce in general would not survive if the current 2020 budget proposals were instituted.
It emphasized that the proposals would, among other adverse effects, accelerate the speed at which already rising inflation was escalating.
“Governments receive more revenue in the long-run from increasing production than from over-taxing existing production. Government and mining investors therefore share the same long-term interests for a thriving future mining industry,” the Chamber said.
ZCM said the current approach to mining taxation was focused exclusively on the short-term need to repair the fiscal deficit.
“This approach has already reduced returns for both companies and Government in 2019, and the trend will worsen in the coming years,” the Chamber said.
By Buumba Chimbulu, Daily Nation