The following content is sourced from external partners. We cannot guarantee that it is suitable for the visually or hearing impaired.
(Bloomberg) -- Zambia eased tax regulations that have prevented refunds estimated at more than $600 million being paid to mining companies operating in Africa’s second-biggest copper producer.
The new rules, effective on Monday, allow exporters to provide import documents from transit countries instead of only the country of final destination, the Government Gazette signed by Zambia Revenue Authority Commissioner-General Berlin Msiska shows. The document was sent to Bloomberg News. The edict only applies to future payments and not monies already owed, with the revenue authority planning to start talks over the backlog “on a company-by-company basis,” said Jackson Sikamo, president of the Lusaka-based Zambia Chamber of Mines.
The revised value-added tax regulation is “a positive, it’s a move in the right direction,” Sikamo said by mobile phone, confirming the veracity of the document. “We want to sort out the refunds going forward and have discussions on the backlog.”
The government’s withholding of value-added tax repayments has led to companies suspending more than $1.5 billion in investments with at least one operation halting. Mine owners have also warned of 12,000 job cuts as a result of a higher- royalty tax system introduced in January amid copper prices trading near five-year lows. Glencore Plc, Vedanta Resources Plc and First Quantum Minerals Ltd. have operations in Zambia.
The old rules required companies to receive payments from customers directly into their Zambian bank accounts and they needed to supply import receipts from the country of final destination of their product to claim VAT refunds. Mine owners claimed this was almost impossible as they sold their copper to trading companies and didn’t know the final destination.
Konkola Copper Mines, Vedanta’s local unit, said in November the revenue authority owed $130 million in VAT credits under the dispute while First Quantum said last week it was owed $246 million by the end of 2014.
To contact the reporter on this story: Matthew Hill in Johannesburg at firstname.lastname@example.org To contact the editors responsible for this story: Antony Sguazzin at email@example.com Ana Monteiro, John Viljoen