Zambian Government Considering Higher Mining Tax
Rumours are swirling that the PF government is outlining plans to trim its fiscal deficit next year and might be raising mining taxes to do so.
The Ministry of Finance is targeting a budget shortfall of 6.5% . At the same time, it forecasts mineral-royalty and mine-profit tax revenue increasing by about a quarter, as copper output grows 3.7 percent and prices remain flat.
That suggests an increase in rates for both profit tax and royalties for companies including said Mark Bohlund, an Africa economist with Bloomberg.
“The sharp increase in mining royalties and mining corporation income tax appear to be based on a change in the taxation regime,” he said in reply to emailed questions.
Finance Minister Margaret Mwanakatwe is due to present the 2019 budget to lawmakers this month. She’s trying to allay fears around Zambia’s external debt that grew to $9.4 billion at the end of June, almost double the amount at the end of 2014, and get the International Monetary Fund to resume talks over a potential $1.3 billion bailout.
Last year, the IMF classified the country as being at high risk of external debt distress. Standard & Poor’s and Moody’s Investors Service both cut their credit ratings further into junk territory in August, and the southern African nation’s Eurobonds have been the world’s worst performers this year.
Yields on its $1 billion bond due 2024 rose to a record 16.4 percent on Wednesday.