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He told delegates to the recently held Chamber of Mines Annual General Meeting in Victoria Falls that taxes which local mining firms were remitting to the Government were high if compared to other countries in the region.
He said mines as enterprises looked at the total impact of doing business before making an investment.
Mr Gumbo said those mining firms that were already operating before the high tax regime was effected might be forced to shut down operations if taxes remained on the high side.
“Our tax legislation at the moment means that a lot of mines will close operations in future. As business, we look at the total impact of doing business before making an investment. Zimbabwe’s royalties on gold and diamonds are high and need review,” he said.
Royalties on gold and diamonds are pegged at seven percent and 15 percent respectively.
“In Angola royalties on gold is pegged at five percent, Tanzania three percent, as well as five percent in Namibia and Zambia. That of diamonds in Botswana is 10 percent, Namibia and Angola five percent,” he said.
He said Zimbabwe suffered brain drain in the last decade resulting in the creation of skills gap.
To address the challenge, Mr Gumbo said the mining entities were hiring consultant companies.
“The withholding tax on professional fees is a remnant of the Unilateral Declaration of Independence period and its relevance in the current climate needs to be assessed.
“The 15 percent withholding tax by Government charged on mines to use intellectual capacity does not really make sense,” he said.
On the proposed Mines and Minerals Amendment Act, he said: “We need to finalise the Act so that investors know their position because it has been three years now since Government made an announcement of the amendment Act. It is important to note that if we say statements as a country, investors react; we need to finalise the Act. And if finalised, we urge the Government not to change it for the next 15 years or 20 years to come.”
Crafting of the Mines and Minerals Amendment Bill started in 2009
Mines and Mining Development Minister Dr Obert Mpofu said Zimbabwe’s economy was operating under a different environment adding that Government delayed the amendment of the Act to make further consultations with various stakeholders.
He said his ministry supported the policy of continuously reviewing royalties in line with present developments to make sure every citizen benefited from the exploitation of the country’s mineral resources.
Dr Mpofu said the issue of royalties on gold should be handled carefully in order to protect small-scale miners as well as guarding against leakage of the mineral onto the black market and also not discourage the exploitation of marginal reserves of the resource.
Online Reporter