As if South African platinum producers weren’t already having a difficult time in the business, now the Zimbabwe tax authorities are getting up close and personal to examine the work being done how it affects the country’s profits. According to Finance Minister Tendai Biti, if the nation is to benefit from its own natural resources, the tax laws are in need of serious revisions.
The Finance Minister has reported amendments to the Revenue Authority Act giving Zimbabwe’s Revenue Authority the power to closely inspect miners. These authorities will be able to visit any mining location, enter the premises, examine everything from mining operations to records and security systems, and even go so far as taking samples from the site. Tax authorities will also be able to collect important information like deeds and trade lists in order to assess individual’s tax liability.
These developments could prove detrimental to South African platinum miners working in Zimbabwe, something the mining industry does not need especially since their growing list of problems already includes demands for wage increases, weak metal prices, and rising production costs. And let’s not even mention the amount of muscle the authorities are willing to flex to get their point across. Some companies have been handed bills as hefty as $33.8 million. These increased tax demands on mining companies puts pressure on the cash flows, therefore causing significant delays in expansion programs that would substantially increase output, some upwards of 50%.
While Zimbabwe has the second largest known platinum reserves, the aggressive measures taken by these tax authorities are giving the nation an unfortunate crisis of confidence.
photo from flickr