Harare (New Ziana) –Tax incentives extended to the mining sector by government are meant to attract new investment while ensuring maximum utilisation of the country’s mineral resources to achieve a US$12 billion mining industry by 2023, a Cabinet Minister has said.
Gold production of 100 tons and earnings of US$4 billion per annum as well as production growth across other high value minerals such as platinum, diamonds, lithium and chrome will anchor the attainment of the US$12 billion milestone.
Finance and Economic Development Minister Professor Mthuli Ncube said tax incentives that the mining sector enjoyed were not because it was being favoured.
In his 2020 National Budget, Prof Ncube announced a cocktail of new and extension of existing, duty free and tax rebates across many sectors to drive economic recovery.
Specifically for the mining sector, Prof Ncube allowed mining houses to bring in “tangibles and intangibles around computer software as tax deductible items” and reviewed downwards the royalty on diamonds from 15 percent to 10 percent.
This was on top of other already existing tax incentives being applied to the mining sector.
“Chair, we are not being soft on the mining sector or favouring it. You know, we are trying to promote investment in the sector and incentivise the sector. We are trying to grow our export earnings in the sector (so) really we do not want the tax to be an impediment towards that kind of investment,” he told Parliament.
“We want to make sure that investment flows in. It is our desire that we have an investment of US$500 million equivalent between now and the year 2023 in the lithium sector (for example). We believe that through these tax incentives in the form of a tax exemption is one way to attract investment.”
Ncube said the government would not hesitate to pass on incentives because this would in turn assist in creating jobs and drive foreign currency earnings.
“We have been very clear that the mining sector is a key sector and I think that we all agree that Zimbabwe has so many minerals and we desire to have those minerals exploited to the benefit of Zimbabweans but the investors also want to earn a fair return and why not?,” he asked.
“That the mining sector is not paying enough taxes – again you know we benefit a lot from foreign direct investment from the jobs that the mining sector creates. We benefit a lot from the exports and forex that the mining sector generates. The mining sector is the largest generator of foreign currency into Zimbabwe, showing we ought to recognise that this is an important sector for driving our exports.”