An Evaluation of Windfull Tax,and the Impact it could have on Zambia vis a vis Foreign Direct Investment
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Date
2013-03-15
Authors
Malama, Chilombo Kambole
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Abstract
Sovereignty is a key entity of every State. With the status of sovereignty is the ability of a state to create laws that govern the affairs that occur within its territorial domain. A state thus has the right to dictate when and how its resources are to be used by its citizens, and even more so by foreigners wishing to gain some advantage from the use of the said resources. In Zambia one such resource is copper, a mineral heavily depended on by the nation's economy.
This paper examines the rights of Zambia as a sovereign entity to impose laws that will determine how its various industries are to be regulated with particular focus on the mining sector. This is in light of tax policies imposed, specifically windfall tax. The paper addresses the conditions under which the windfall tax was earlier imposed, subsequently removed, and examines the legal implications that may arise from the imposition of windfall tax again, in light of international responsibility and opinion. The paper does this by evaluating various international arbitral tribunal decisions. The paper proceeds to address the role that foreign direct investment plays in the economy of a nation, the positive aspects as well as any negative ones. An examination of incentives offered to attract investors is reviewed, as well as an examination of the importance if any of attracting and maintaining foreign investment, in light of the fact that Zambia is a developing nation. Thus Zambians current legislative position in this regard is evaluated as well as an assessment of the history of the mining environment, to date. The paper then concludes by giving a general conclusion of the dissertation, and then offers recommendatory policies that the country may adopt in order to improve its economic growth and prosperity.
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Keywords
Excess profits tax(economic conditions) - Zambia , Investments,Foreign - Taxation(Zambia) , Capital Gains tax - Zambia , Mining and Mineral resources - taxation - Zambia