Zimbabwe's government will review its rates of mining royalties and taxes in an effort to reduce costs and ensure optimal exploitation of the country's minerals, according to Mines and Mining Development Deputy Minister Fred Moyo. Speaking to parliamentarians at a pre-budget seminar in Victoria Falls last week, Moyo said that addressing current challenges facing the mining sector, which accounts for 50 percent of local exports and 50 percent of foreign direct investment into Zimbabwe, is "critical" as mining is the country's "anchor" for economic growth, reports the state-run Herald.

"Zimbabwe's (mining) royalty rates are some of the highest in the region, which does not augur well for the country as an investment destination (for mining)," said Deputy Minister Moyo, as quoted by the Herald. "We will write rules that will enable these rates to be looked at."

The deputy minister also pointed out that the mining taxation system, which he described as "fragmented" and "cumbersome" also required immediate revision.

The Herald reports that mining firms are supposed to pay a 25 percent corporate tax; royalties ranging from 1 to 15 percent; a 15 percent value added tax; a unit tax of between US$3,000 to US$10,000; and a 20 percent withholding tax. They are also levied 2 percent by the Environmental Management Agency. Additionally, mining companies are reportedly liable for a 2 percent presumptive tax; an 0.8 percent levy for the Minerals Marketing Corporation of Zimbabwe; and they are also supposed to pay for mining titles such as special grants and exploration licenses.

It is hoped, says the news report, that such a review of the sector's rates of mining royalties and taxation may lead to a new Mines and Mineral Development Act.