July 22, 2011 / 10:56 AM / 7 years ago

UPDATE 1-Namibia plans 17 pct mining tax hike to boost revenue

* Mining tax to rise to 44 pct from 37.5 pct

* Excludes diamond mining companies from hike (Adds details)

By Servaas van de Bosch

WINDHOEK, July 22 (Reuters) - Namibia plans to raise its mining tax by 17 percent to boost revenue, but the hike will not apply to the diamond sector, the ministry of finance said in a statement.

The ministry of finance wants the mining tax to be raised to 44 percent from 37.5 percent, according to the statement e-mailed to Reuters on Friday.

Namibia is one of the world’s largest producers of diamonds and has deposits of uranium. Foreign firms are exploring in the southwest African country for gold, lead, zinc and iron ore.

Rio Tinto and Australian miner Paladin Energy are the current uranium producers in Namibia.

The ministry said the country is facing volatility in its key revenue sources, including minerals, and was looking to strengthen revenue collection.

“The ministry has also proposed amendments to various tax laws as well as new tax legislation,” it said.

The ministry also said the country faced challenges in revenue distribution from the Southern African Customs Union (SACU) pool.

SACU, the world’s oldest customs union which celebrated its 100th birthday last year, is reforming a revenue-sharing formula that now sees South Africa transferring a large portion of its customs receipts to its neighbours.

The transfers, which are meant to compensate the smaller countries for South Africa’s desire for high import duties on things like cars, have historically accounted for just over a third of government revenue in Namibia. (Writing by Olivia Kumwenda, Editing by David Dolan)

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