LUSAKA, June 14 (Xinhua) -- The Zambian government has assured that the mining windfall tax and the variable profit tax will not apply at the same time in order to preserve the nation's attractiveness in the sector.

    Minister of Finance and National Planning Ng'andu Magande made the promise in a letter of intent to the International Monetary Fund (IMF) managing director Dominique Strauss-Kahn.

    In the letter posted on the IMF website, he said "in implementing the new fiscal regime, the government will be mindful of the need to preserve Zambia's attractiveness for investment in mining.

    To this end, the windfall tax and the variable profit tax will not apply at the same time," Magande said.

    He said when the windfall tax applies, the profit tax rate would remain at the standard 30 percent.

    Magande said with the international copper prices projected to decline by about 12 percent this year, mining revenue is estimated at 2.8 percent of Gross Domestic Product (GDP) of his country.

    He said all mining revenue this year in excess of what would be collected under the old regime would be saved in a separate government mining resource account (MRA) at the Bank of Zambia (BOZ). "The MRA will be used as a stabilization fund to smoothen expenditures over time, taking into account macroeconomic conditions and absorptive capacity," Magande said.

    He said from next year onwards, the net flow to the MRA would be based on the medium term expenditure framework (MTEF) and that the funds would be used to finance high priority projects identified in the Fifth National Development Plan (FNDP).

    The minister said all revenues, including those channeled through the MRA and expenditures would be fully integrated in the budget and fiscal accounts.

    Magande said a proposal on the establishment of the treasury single account (TSA) system would be submitted to cabinet by the end of this month, which, he said, is aimed at making TSA effective next year.