The Zambian Government plans to relax its copper exports tax rule, as it requires mining firms to provide certificates from importing countries, the country’s Finance Minister Alexander Chikwanda has said.
In addition, the government is also planning to repay the $600m in value added tax (VAT) it withheld from copper mining firms unable produce import certificates.
Zambia introduced the tax rule with the aim of improving revenue collections from the mining industry, which contributed only 18.8% to the country’s total revenues last year.
The government alleged that mining firms have taken advantage of the Zambia Revenue Authority (ZRA) when it did not collect enough tax from them in 2013.
Zambia Finance Minister Alexander Chikwanda had earlier said: "The delays on the refunds is largely on account of the rule requiring among other things, documentation from importers outside our country’s jurisdiction.
"[The] government has a duty to revisit practices which impinge negatively on the efficient functioning of the economy. The mining sector is critical to the economy."
The new tax rule has affected companies such as First Quantum Minerals, Vedanta Resources, Barrick Gold and Glencore Xstrata, which invested approximately $6bn in the country since the onset of mining boom, which was highest in 2011.
However, mining companies have responded that it is not possible for them to produce import certificates as their minerals are sold to trading companies that sell the products to multiple clients.
Zambia’s copper production rose by 16% to 559,117t this year, from 900,000t in 2013.