ZAMBIA Law and Practice Contributed by: Harriet Mdala, Natasha Lungu, Samuel Muleya and Chanda Musonda-Chiluba, MAY & Company
Classification of Minerals The Minerals Act categorises minerals into five groups, with each being subject to distinct MRT rates. These are: • base metals: non-precious metals, such as copper, iron, cobalt, and zinc; • energy and industrial minerals: resources like coal and uranium, used for energy generation; • gemstones: non-metallic minerals used in jewellery, such as emeralds, rubies, and amethysts; • precious metals: high-value metals, including gold, platinum, and silver. Calculation of MRT MRT is calculated based on either the gross value or the norm value of the minerals. • Gross value: applies to industrial minerals, energy minerals, and gemstones; calculated as the real - ised price of the sale free on board (FOB) at the export point or point of delivery within Zambia. • Norm value: used for base metals (eg, copper) and precious metals, calculated based on international market prices such as the London Metal Exchange (LME) or Fastmarkets MB average monthly prices. Incremental MRT Rates for Copper The incremental MRT rates for copper are as follows: • 4% of the norm value when the regular price is below USD4,000 per tonne; • 6.5% of the norm value when the regular price is between USD4,000 and USD5,000 per tonne; • 8.5% of the norm value when the regular price is between USD5,000 and USD7,000 per tonne; and • 10% of the norm value when the price exceeds USD7,000 per tonne. Other MRT Rates by Mineral Type Other MRT rates by mineral type are as follows: • base metals (excluding copper, cobalt, vanadium): 5% of norm value; • energy and industrial minerals: 5% of gross value; • gemstones: 6% of gross value; • precious metals: 6% of the norm value; and • cobalt and vanadium: 8% of the norm value.
For tax purposes, the Mines Act does not differentiate between domestic and foreign investors. 4.2 Tax Incentives for Mining Investors and Projects Zambia provides a range of incentives aimed at attracting investment and supporting the mining sec - tor. Key incentives include: • guaranteed input tax claim for ten years on pre- production expenditure for mining, petroleum or gas exploration for registered suppliers in the sec - tor; • any mining company holding a mining licence car - rying on the mining of base metals is taxed at 30%; • dividends paid by a mining company holding a mining licence and carrying on mining operations is taxed at 0%; • 25% mining deduction on capital expenditure on buildings, railway lines, equipment, shaft sinking or any similar works; and • zero rating of capital equipment and machinery listed in the Second Schedule of the Value Added Tax Zero-Rating Order when supplied to a holder of a large-scale mining licence. Stabilisation Agreements The mining laws in Zambia do not expressly provide for stabilisation or development agreements. Howev - er, similar protections may be found under the Invest - ment Trade and Business Development Act No 18 of 2022 (the “ITBD Act”). Under Section 6 (2) of the ITBD Act, the Zambia Development Agency, with the approval of the Minister of Finance and the Attorney General, may enter into an investment protection and promotion agreement (IPPA) on behalf of the govern - ment with investors. While IPPAs are not explicitly termed as “stabilisation agreements”, they can encompass provisions tradi - tionally found in such agreements, such as: • tax stability;
• protection against expropriation; and • legislative and regulatory stability.
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