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MessagePosté: Lun 22 Oct 2012 09:28
de phili675

KONKOLA Copper Mine (KCM) chief executive officer Jeyakumar Janakaraj has said the 25 per cent increase in Capital Allowance paid on mining investment in the 2013 national Budget will negatively affect the mining sector’s expansion in the country.
Finance and National Planning Minister Alexander Chikwanda announced that the Government would reduce to 25 per cent from 100 per cent the capital expenditure deduction rate, applicable in the mining sector, and further provide that capital expenditure would only be claimed for deduction from the year capital asset is brought into use in the business.
Mr Janakaraj said in Chingola that there was need for the Government to come up with favourable stable taxation policies for the mining sector which he said was a long-term investment project which does not produce returns immediately.
“It takes six years to develop a mine and it takes 20 years for the investor to start receiving returns. Small, small changes that pluck the mining sector tax incentives will negatively affect the performance of the expansion of mining sector investments in Zambia,” he said.
Some economic analysts have said the 25 per cent increment in capital allowance would negatively affect the rate at which companies were injecting their capital investment in the Zambian mining sector.
“Capital allowance is the percentage of tax relief enjoyed by a company over the period of investment to allow their project to generate returns. It is a major incentive for companies to expand and if it is increased what generally happens is that growth becomes limited,” said Lusaka-based economist, Chibamba Kanyana.
The proposed 2013 national Budget would review the 100 per cent reduction in the amount of corporate tax payable, offered as an incentive for investment in large-scale projects in the mining sector’s investment capital asset’s cost.
During the 2013 Budget presentation in Parliament recently, Mr Chikwanda said the Government wanted to use the review of mining sector tax incentives as part of the measures aimed at raising a total of K32.2 trillion in revenues and financing. Domestic revenues were expected to account for 76.8 per cent of the 2013 national Budget.
KCM, which is owned by the Vedanta Resources PLC, is Zambia’s leading mining company which has invested more than US$2.5 billion from the time it bought the mines, which were part of the defunct Zambia Consolidated Copper Mines (ZCCM) in 2004.
The mining firm has massively invested in mining facilities and increased its mining base which primarily engages in the exploration, production and sale of copper and cobalt. KCM is listed on the London Metal Exchange.