The New Dawn Mining Tax Regime
In the 2022 budget speech, Minister of Finance, Situmbeko Musokotwane outlined changes that have been made to the mining tax regime in the country. Among these is the re-introduction of deductibility on mineral royalty for corporate tax purposes and increasing the period for disallowed interest deduction to 10 years. These two measures are projected in the short term to reduce tax revenue from the mining sector but envisaged to actualize the UPND administration’s target of producing 3 million metric tonnes of copper in 10 years. Beyond this the Minister has committed to revise the calculation of mineral royalty making it similar to the calculation of PAYE, where only applicable income is taxed at a higher band. This writing will break down these changes, their implications and how they will contribute to this target. Mineral royalty is a tax levied on the total number of minerals extracted or total minerals sold by a mine. The rate paid by a mining house is applied on the product of