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Zambia resumes VAT refund payments to mining firms

Zambia has started paying value-added-tax (VAT) refunds again to mining companies, its mining minister said on Monday, aiming to put an end to a long running dispute.

Mining companies had claimed for months that they were owed more than $600 million in VAT refunds and in February the government decided to relax the rule requiring exporters to produce import-export documents to claim the refunds.

“We are very committed to repaying. We have started to pay and that’s to clear the debacle,” mines, energy and water development minister Christopher Yaluma said on the sidelines of the Zambia Mining Investment Forum.

Foreign companies operating mines in the world’s second biggest producer of copper include Glencore, First Quantum Barrick Gold Corp and Vedanta.

Vedanta’s chief executive Tom Albanese, a delegate at the event, confirmed that the government had resumed some payments.

“They are beginning to pay back on invoices post February 2015 on a case by case basis,” he told Reuters on the sidelines of the conference.

A source at another mining firm, who declined to be named because he was not authorised to speak to the media, also said Zambia had started some VAT refund payments, although small.

 

Source – Reuters

 

Zambian mining industry cries foul

Zambia was hobbling the country’s mining industry by withholding more than $500 million (R5.3 billion) in tax repayments from companies including Glencore Xstrata and Vedanta Resources, the Chamber of Mines said on Friday.

The Zambia Revenue Authority (ZRA) last year stopped tax repayments to mines that do not comply with a rule requiring them to provide an import receipt from the country of final destination of their commodities.

Mines often did not have access to such documents as they sold their products to traders and did not know where the copper ended up, said Emmanuel Mutati, the president of the Chamber of Mines.

“They’re still withholding the repayments,” Mutati said. “It’s crippling the industry now.”

Mumbuna Kufekisa, a spokesman for ZRA in Lusaka, declined to comment.

Zambia, Africa’s biggest copper producer after the Democratic Republic of Congo, relies on the metal for about 70 percent of the country’s export earnings.

The government has accused mining companies of tax avoidance and introduced new rules to tighten monitoring of mines.

The Chamber of Mines had made no progress when it discussed the repayments with officials from ZRA on April 14, Mutati said.

The authority maintained that export certificates were not sufficient for mining companies to claim value-added tax (VAT) repayments, he said.

The withholding of VAT repayments threatened to “wipe out profits” as exporters were forced to finance extra capital requirements, it said this month.

Mining companies in Zambia were also threatened by the 29 percent increase in power costs introduced on April 2, Mutati said. – Matthew Hill for Bloomberg

Source – IOL