Government has declared it will not enter into any agreements with mining companies unwilling to pay requisite mining taxes as they invest in the country’s mining industry.
Director and Commissioner of Mines in the Ministry of Mining Samuel Sakhuta said the government is serious about its position.
“We must remain vigilant and ensure these agreements are in the best interest of the country,” Sakhuta stated.
“We are diligently implementing policies to establish a regulatory framework that serves the interests of both Malawians and investors,” he said.
Sakhuta said the government’s aim is to create a conducive environment for investors.
“Possessing mineral resources is one thing, but fostering an investment-friendly atmosphere is another. The government has introduced numerous incentives to attract investment, highlighting Malawi’s peace and stability as key advantages,” he said.
“For instance, mining companies importing equipment benefit from duty-free status, and we guarantee tenure security,” he said.
Currently, the government is in negotiations with 11 mining companies, with more on the cards.
Sakhuta acknowledged concerns about delays in signing contracts but emphasized the necessity of thorough vetting.
“We are determined to secure agreements that address all potential issues,” he said.
He said discussions with a number of mining companies are nearing completion, although some sticking points remain.
“For example, the government insists on higher tax rates than the two percent being proposed. We believe it is better to keep our minerals in the ground than to agree to unfavorable terms,” Sakhuta said.
Reflecting on past agreements, such as the Kayerekera Uranium mine deal, the ministry acknowledged the absence of critical institutions like the Reserve Bank and the National Planning Commission in the negotiations then.
“Moving forward, the ministry has underscored the necessity of involving these key institutions in all future mining agreements to ensure robust and beneficial arrangements for the country,” he said.
Malawi Revenue Authority (MRA) began the collection of mineral royalties on April 1, 2024 following amendments to the Mines and Minerals Act and the Taxation Act in 2019. This transition aims to enhance efficiency in the collection process.
Malawi has a number of mining projects on the cared. The Kasiya rutile mining project, one of the world’s largest, has completed its exploration phase.
Companies including Chinese firms Mawei and Hengen Kangamkunde have expressed their readiness to comply with Malawi’s tax and legal requirements.
Principal Revenue Officer in the Ministry of Finance and Economic Affairs, Leonard Mushani, highlighted the challenges faced by the Ministry of Mines in collecting mineral royalties due to capacity issues.
“The Ministry of Mines has been collecting mineral royalties, but there have been challenges as far as capacity is concerned, which is why the responsibility has been transferred to MRA,” he said at a recent meeting in Lilongwe.
The MRA’s Revenue Officer, Allan Nyalo, explained the new procedures for mining companies.
He said the companies are required to conduct self-assessments and file royalty returns upon producing minerals. These returns, which declare the values and volumes of the minerals, must be submitted to the Department of Mines.
“For minerals intended for local use, companies must file the royalty return processed by the Department of Mines to MRA,” said Nyalo.
For minerals destined for export, companies are required to declare their intent to the Department of Mines.
The Department of Geological Surveys will then evaluate the mineral royalty base to determine value and volume, issue a certificate of inspection, and seal the container.
The Department of Mines will process and file the royalty return to MRA through the same online platforms.
MRA is also developing an ICT system to facilitate the payment of mineral royalties via an e-Payment platform.
Government aims to streamline tax collection and ensure compliance among mining companies operating in Malawi.
