- The Provisions of the newly enacted Property Transfer Tax, PTT in Zambia is a very important guideline to the mineral processing sector. Africataxreview.com highlights all you need to know about it.
The Zambia-PPT deduction on Transfer Mineral Processing Licenses emerged from Zambia’s Ministry of Finance and National Planning as headed by Dr. Situmbeko Musokotwane. The PTT which is an acronym of the Property Transfer Tax among others represents the tax paid to the Zambian government for the transfer of property for residence or commercial.
On the other hand, ‘a mineral processing license’ is a license that enables the holder to process minerals and cut, polish, and manufacture jewelry or “an interest in a mineral processing license”.
It is important to state that, in the Mining Industry, the definition of “property” was defined to include a “mining right (i.e. a mining license or an exploration license) issued under the Mines and Minerals Development Act No 11 of 2015 (the Mines Act)” or “an interest in a mining right”, the transfer of which attracted the payment of PTT at the rate of 10% of the value of the mining license/ exploration license.
Background on Zambia-PPT Deduction
The PPT was first presented for amendment by the Ministry of Finance and National Planning to the National Assembly for deliberation and inclusion in the 2022 fiscal year on Friday 29th October 2022. The PPT bill was finally promulgated into law on the 1st of January 2022.
With the implementation of the law now effective, here are important facts to note about the PPT Act.
The Status of Zambia-PTT Deduction Before Enactment of Amendment Act
Initially, before it was amended, the PTT was payable at varying rates (i.e. 5% or 10%) on the transfer of “property” which the PTT Act defined to include:
- Shares issued by companies incorporated in Zambia or those issued by companies incorporated outside Zambia that in one way or the other owners at least 10% of the shares in a company incorporated in Zambia.
- Land held under statutory tenure in Zambia.
Zambia-PTT Deduction on the Transfer of a Mineral Processing License
Following the passing of the PTT Amendment Act, from 1 January 2022, PTT will now be deducted on the transfer of a “mineral processing license issued under the Mines Act” or “an interest in a mineral processing.
This means, that if an individual wants to transfer a mineral processing license or an interest in a mineral processing license to someone else, he would have to pay a PTT that is the equation of 10 percent of the “realized value” of the license/interest to the Zambia Revenue Authority (the ZRA) before the completion of the transfer.
Application of the PTT Amendment Act
Although the PTT deductible on the transfer of a mineral processing license or an interest therein is said to be 10% of the “realized value” of the mineral processing license/ the interest therein, the PTT Amended Act neither clarifies what will be considered to be the “realized value” of a mineral processing license for purposes of the PTT Act and nor does it explain how an interest in a mineral processing license may be computed.
However, it denotes that the Commissioner-General of the ZRA can use their discretion to determine the “realized value” of a “mining right” or an interest therein”.
The Act further stated that despite this, a “mineral processing license” is not a “mining right” and as such, following the passing of the PTT Amendment Act, clarity would be required from either the ZRA (through the provision of a detailed Practice Note on the same) or by the Minister (through a subsequent amendment to the PTT Act), on how the value of a mineral processing license or an interest therein will be computed for PTT.
Parties should acquaint themselves with this Amendment Act to ensure they execute their transactions correctly.
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