LUSAKA, Dec. 20 (Xinhua) -- More than half of Zambia's mining firms will become loss-making at current copper prices if the Zambian government goes ahead to implement its proposed new tax regime, a report released on Thursday has revealed.
The report titled "Taxing the Mining Industry" released by the Chamber of Mines of Zambia, an association representing mining firms in Zambia, said the position would be even worse for gemstone producer who have an additional export duty to contend with.
Goodwell Mateyo, president of the association said during the release of the report that Zambia will tax itself out of the market for new investment and expanded operations if the new tax regime goes ahead.
He said for a country that has acknowledged the need to diversify its mineral sector as well as its economy, the move was a completely self-defeating initiative.
"The research shows that if the 2019 budget proposals are enacted, Zambia will have by far the highest tax burden of the 12 mining countries sampled," he told reporters during the release of the report.
Zambia's mine are grappling with the reality of massively increased costs next year and the only operational response available will be to scale back certain operations, reduce capital expenditure, and mine only the highest grades available, he added.
There is a standoff between the government and the mining firms on the backdrop of new tax regime which comes into effect next January.
Among the new measures in the new tax regime include increasing mineral royalty rates by 1.5 percentage points at all levels of the sliding scale, and introducing a fourth tier rate at 10 percent on the sliding mineral royalty regime, which would apply when copper price rise beyond 7,500 U.S. dollars per tonne.
While the government has insisted on effecting the new tax regime, mining firms have warned of job cuts and reduced capital expenditure.