‘Zimra getting all its revenue from mining sector’

Patrick Chitumba in Victoria Falls
The Zimbabwe Revenue Authority is not receiving all the revenue due to it from the mining industry because of a multiplicity of policies which contradict legal provisions, Zimra Commissioner in charge of taxation, Mr Tichaona Chiradza, said.
In a presentation titled “The tax peculiarities of particular natural resource sectors, experience and issues in the taxation of the mining industry” at the on-going International Tax conference in Victoria Falls, he said Zimra was not fully receiving tax from the mining industry.

He said the different mining Acts such as the Mines and Minerals Act, Minerals, Marketing Corporation of Zimbabwe Act, among other Acts did not provide clear guidelines to Zimra on the fair market value and affiliated transactions.

“There are different tax regimes within the mining sector and that gives rise to conflicting interests. There is lack of trust between the sector and Zimra and this affects revenue streams. We need to point out that common benefits from the mining sector are that they are a source of foreign currency and they increase government revenue in form of VAT, income tax, commission fees but in addition, there are less pronounced benefits to Zimra,” he said.

Mr Chiradza said it was a fact that minerals were a national pride but people were poor.
He said there was a need to maximise on the mining sector so that the future of coming generations was secured.

“We need to carry forward the mineral wealth,” he said.
Mr Chiradza said frequent changes in the law were leading to uncertainty in the industry.

“For example, the rate of royalties for one of the minerals was 2.5 percent in 1994, 10 percent in 2010 and 5percent in 2011.

“This lack of consistency in the industry breeds mistrust and uncertainty between the tax persons and the industry. There is a feeling that the mining industry is getting away with murder.

“Although the sector claims that they are contributing significant tax to the national cake, when we look at it, what they are contributing is mainly through employment creation, Pay As You Earn for example when they enjoy rebates when they bring in their capital goods, ” said Mr Chiradza.

He said Zimra was in the process of reviewing the Income Tax Act with the intention to simplify it so that it can be understood by the authority and the taxpayers.

“We are building a relationship with tax payers because we are not here just to take away their money but to grow the national cake for the development of the country,” he said.

The new Income Tax Act is supposed to come into effect in January 2014.