adminTawanda Musarurwa Harare Bureau
GLOBAL mining conglomerate Rio Tinto paid out a total of $14 million in taxes to the Zimbabwean government last year. Rio Tinto owns a 78 percent stake in Murowa Diamonds, an open pit mining operation located near Zvishavane in south-central Zimbabwe. The remaining 22 percent interest is owned by local miner RioZim Limited.
According to Rio’s latest voluntary taxes paid report, the mining giant paid $1 million in corporate income tax and $13 million in royalties to the government last year. Zimbabwe’s corporate tax rate currently stands at 25,75 percent.
Its amount is based on the net income companies obtain while exercising their business activity, normally during one business year.
On the other hand, the State also charges a 15 percent Value Added Tax (VAT) on diamonds produced in the country. The Murowa diamonds mine produced a total 344,000 carats last year.
Since 2004 the mine has produced over one million carats which have been sold on international markets. But 10 percent of its gems are reserved for the local Zimbabwe cutting and polishing industry.
Economist Trust Chikohora said the Rio Tinto payment to the government is “reasonable”.
“If Murowa paid that money in one year, then it is a lot of money and a significant contribution by one company to the fiscus . . . We need to collect revenue from companies on a sustainable basis that allows the companies to reinvest in the business and for investors to get a fair rate of return,” he said.
“You should also bear in mind that these companies will also create employment for a lot of people who will also pay PAYE (Pay-As-You-Earn). The companies will stimulate a lot of economic activity through downstream industries.
“Mining companies can also participate in infrastructure development such as roads, schools, hospitals and power generation.”
Yesterday, Mines and Mining Development Minister Walter Chidhakwa announced that he had met with all the diamond mining companies (including Murowa) and they were agreeable to be merged into a single entity.
The move is expected to boost diamond revenue going into the fiscus.
Meanwhile, at a broader level, Rio Tinto said it had paid around $7,1 billion in global taxes during 2014, with the majority of royalties going to Australia, which is home to around half of the conglomerate’s global assets.
Distribution-wise in some of its main investment destinations, Rio Tinto paid $5,6 billion in Australia, $432 million in Canada, $262 million in Chile, $211 million in the United States, $185 million in Mongolia, $110 million in South Africa, $106 million in France, $67 million in Guinea, $44 million in Singapore and $29 million in the United Kingdom.
Online Reporter