LUSAKA (Reuters) - Zambia’s President Edgar Lungu said on Friday that he will go ahead with a new non-refundable sales tax in place of Value Added Tax (VAT), despite criticism from mining companies.
Africa’s second-biggest copper producer is introducing the tax change as part of a plan to keep a greater share of mineral resource profits for the country and tackle its debt despite criticism that it is deterring new investment.
Lungu said companies that don’t like the tax regime should leave the country. He said companies such as Vedanta Resources’ Konkola Copper Mines (KCM) and Glencore’s Mopani Copper Mines (MCM) were laying off workers and blaming the tax changes.
Mopani plans to close two shafts at its Nkana mine in Kitwe, the company said last week, a move that union sources said could affect more than 2,000 workers.
“It is a sovereign state and when we decide how to manage our tax regime, we decide on our own,” Lungu told supporters at Simon Mwansa Kapwepwe international airport in Ndola, about 330 km north of Lusaka.
The new sales tax was meant to have been introduced on April 1, but has been postponed until July to allow more consultation.
Lungu said the government was consulting its lawyers to ensure that everything is done within the law in the event that Zambia decides to bring in new investors.
“I know people who are willing to come and invest in the mines. Immediately we kick out these people, others will come and re-open the mines,” Lungu said.
Other mining companies operating in Zambia include Canada’s First Quantum Minerals and Barrick Gold Corp.
Finance Minister Margaret Mwanakatwe said last week the government was accruing about 1.8 billion kwacha ($140 million) in VAT refunds every month.
The International Monetary Fund has repeatedly warned Zambia is struggling with high debts and shrinking foreign currency reserves.
Reporting by Chris Mfula; Editing by Elaine Hardcastle