A legal perspective of taxation inthe copper mining industry following the privatisation programme

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Musonda, Clare
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The study's main objective was to explore whether or not the tax system in the mining sector in Zambia prior to and in the aftermath of the privatisation of the sector has contributed to making the fiscal landscape in Zambia more or less equitable and shed light on the major tax concessions offered to the new mining investors in the wake of the privatisation programme. While mining is the largest single economic activity in Zambia and has enjoyed increasingly higher earnings in the post-privatisation era on account not only of increased production levels but also soaring international metal prices, there has been a lingering view that its contribution to tax revenue in the years following the privatisation programme has been inordinately low. Additionally, the secrecy surrounding the development agreements signed between the government and the new mining investors has led to considerable suspicion and speculation as to the contents therein and the reasons behind such substantial tax concessions. As a result, the rest of the Zambian taxpayers have had to shoulder the tax burden while the mining conglomerates have been allowed to freely externalise their earnings. Hence the fiscal regime in Zambia and in the mining industry in particular, has been seen as contributing to the heightening inequality and poverty and promoting corruption, among other things. This study traced the legislative changes in the taxation of the mining sector for the period 1995 to 2009 in order to get a clear picture with regard to taxation in the sector, as well as the sector's earnings and taxes paid over the period under review, in addition to the provisions of the development agreements. An effort was also made to review available documents on the taxation of extractive sectors in jurisdictions other than Zambia. It emerged through the study that the increases in the earnings of the mining sector in Zambia have not been matched by corresponding increases in the tax contributions of the sector. In light of the findings of the study, various recommendations are made with regard to how this issue could be addressed both at domestic level as well as the role that can be played by various international players in this matter
mines and mineral resources , Taxation