Press statement from the Chamber of Mines
Zambia Revenue Authority, VAT Rule number 18(1(b)) should be amended and ZRA has an obligation to pay the outstanding vat refunds
We have been surprised by some media reports that appear to indicate that the chamber of mines (cmz) has reached an agreement with the ZRA to resolve a contentious issue relating to the non-payment of input vat to exporters by the ZRA.
In the report aspersions have been cast that the chamber of mines proposed to maintain rule 18 in its current form as it is meant to strengthen the vat system.
It is incorrect to characterize the issue of vat refunds as an issue for the mines alone. ZRA has been withholding refunds for all exporters, as evidenced by a letter from the Zambia chamber of Commerce and Industry to the Minister of Finance. This issue therefore concerns the entire economy.
The chamber recognizes that a number of other important sectors such as agriculture and manufacturing have been adversely affected by the current requirements by ZRA under rule 18(1) (b).
The chamber therefore regrets the cynical and gross misrepresentation being perpetuated that the issue of vat refunds only applies to the mining industry.
We wish to state the following;
1. The Finance Committee of the Chamber of Mines comprising the Chief Financial Officers (cfos) held a meeting with the Zambia Revenue Authority, present was the Commissioner General, Director Investigations, Director Large Tax Payers Office, Deputy Commissioner – customs services, and Acting Legal counsel at Revenue House
2. The purpose was to discuss the outstanding VAT refunds as provided in the law. The backlog has accumulated to over US $600million to-date
3. The meeting was also called to discuss the provisions of the value added tax rules of 1997, rule no 18(1). Rule 18 has been in effect since 1997 but this rule has never been fully enforced due to the impracticalities of doing so. However in
2013, the ZRA began to enforce this rule creating difficulties for exporters to reclaim their input vat.
The Chamber had proposed to the Zambia Revenue Authority that the requirement that exporters of goods and services should submit documents from importing countries be amended as we hold it that ZRA shipping inspection and documents are sufficient proof to demonstrate that an export of goods and services has taken place.
In particular, we are concerned that documents generated by the Zambia Revenue Authority are deemed as insufficient or inadequate to demonstrate proof of export.
Although ZRA expressed concern that some members of the chamber have taken ZRA to court and could not therefore deal with the tax refunds so far owed, the chamber held that the matters are separate and should be dealt with accordingly.
The cases in court relate to rule 18 which would automatically be resolved once the necessary amendment to the rule is enacted.
It is important to note that we have been making these submissions to all relevant authorities.
Zero rating of exports is not a tax incentive and is applicable across many countries. it is designed to promote the growth of export earnings through competitive pricing in the international market.
We wish to state that ZRA withholding tax refunds which exporters are legally entitled to, will render their products uncompetitive.
On 23rd October 2013, we submitted to the parliamentary expanded committee on estimates, among other things that rule 18(1) (b), be amended. The requirement that the exporter produces documents from the importing country was difficult to implement and comply to.
on 4th February 2014, we made another submission on the effects of withholding the refund of value added tax by Zambia Revenue Authority on metal exports by mining companies to the then acting secretary to the treasury, Mr. Felix Nkulukusa at the ministry of finance were we indicated the implications as follows:
1. Non-refund of VAT for the period august 2013 to date, to the tune of more than us$600 million has impacted both on the mining companies and the ancillary industries.
2. Severe liquidity crisis faced by the companies has resulted either in incomplete inability or delayed payments to suppliers and contractors.
3. Some operations are having difficulties in funding employees’ salaries
4. Slow down or complete stoppage of capital expenditure and improvement projects
5. Local suppliers unable to procure their imports
It is a well-known fact that copper exports follow a thorough documented procedure which is verified at the Zambian port of exit, through the ZRA’s Asycuda system. We hold that the documents produced by the ZRA to the exporter are sufficient and valid.
We also argued that the regulatory burden ZRA was giving itself would impede the smooth facilitation of trade and efficient handling of transactions.
In addition, we have, like every other sector, on 31st July 2014, made proposals for an amendment to rule 18(1) (b), as part of our submission on the mining sector national budget proposals for 2015 and also the 2015-2017 medium expenditure framework.
I hope people won’t forget about the tax mines owe ZRA. One chap was recently bragging about making US$500m per year profit and it seems no one is following up on that.
Interesting Documentary of Zambia specifically Glencore (Mopani Mines) under the current Government. Please watch this video and encourage others to do so, there are major concerns raised about our country. Knowledge is power. Here is a brief description of the video “Rüschlikon is a village in Switzerland with a very low tax rate and very wealthy residents. But it receives more tax revenue than it can use. This is largely thanks to one resident – Ivan Glasenberg, CEO of Glencore, whose copper mines in Zambia are not generating a large bounty tax revenue for the Zambians. Zambia has the 3rd largest copper reserves in the world, but 60% of the population live on less than $1 a day and 80% are unemployed. Based on original research into public documents, the film describes the tax system…
Here is the link on youtube https://www.youtube.com/watch?v=WNYemuiAOfU
When will the industry ever comply to the principle of tax, that of contributing to the national basket. The Mines, hiding behind the Chamber of Mines, could be good at interpreting the tax code but they a guilty of lacking patriotism.
In the same vain mines are obliged to truthfully declare their profits. Those falsely declaring losses must served with the correct tax bill plus penalties. And this correct and penalties ought to be deducted from VAT refunds.
LT: Its not unveiling a plague BUT unveiling a plaque! Yabaa!! Plague is a terrible disease!
LT are also obsessed with the word ‘equipments’. There is no such a thing. This kind of schoolboy journalism must be abandoned!
For those who are too lazy to read even things that are explained in simple terms on Wikipedia, VAT is refundable to producers. Everybody pays it but those who add value in the production chain get a refund at some point. Zambians please read before yapping, learn to pay your dues. Some of you don’t even want to pay your rent because you feel that enriches your landlord, what kind of thinking is that. Give the mines theur VAT refund, if they owe you money that is another transaction: learn to pay your nkongoles period!!!!
True VAT is refunded to producers. But what beats me is why F/minister is working OVERTIME to ensures he pays these VAT refunds & NOT chasing the tax owed by KCM whose chairman is on record that he makes 500m usd per year. Also the tax that may be owed by Mopani due to insider trading (transfer mispricing) which was revealed by the European Investment Bank such that the EIB even stopped disbursing loan to Glencore at some point. Zambia sugar also/transfer mispricing as alleged by G Scot a few months ago. One would have thought F/minister would be even more aggressive in pursuing tax evaders or at least using the VAT refund as levearage to give the Zambian cesar what belong to him! Until these alleged tax evaders come clean. ITS SHOCKING! ONLY IN ZAMBIA OR FAILED STATES WOULD SUCH…
I guess someone should write an article to explain what this VAT refund is all about. Not all of us have business studies’ background. The questions that many may ask include; why does ZRA refund VAT to the industries, how do they arrive at the correct figures to be refunded, why export certificates, how has the figure accumulated to such levels, is this refund thing something new? How has this problem been tackled in the past? How come it never raised dust in previous administrations. These are the questions journalists and economists must write about and educate the masses. It’s a pity that experts are quiet while we have people like Fr Luonde, Bishop Mambo, Mtayachalo et al who probably have no knowledge in this area speaking the loudest. Where are the professionals?
This chamber of Urine is full of rubbish. Just because they are a Urine chamber then they should urinate on every one. These chaps are part of Chikwanda’s scam and adding a voice so that they can take our resources. It took president Sata to reverse the decision by chikwanda to export soil. Where was this chamber of urine?
Reading those 4 implications of non payment of VAT to mining companies just drives us back to the point of why Fossil Chikwanda should step down due to conflict of interest.
Yes VAT refunds must be paid. What is of concern to us is that there’s a Minister of a Finance in the name of Chikwanda who is on the payroll of some mining agent. You feel this man is not committed to Zambia but some outside interests. Not fair to have him as a custodian of our money. Anyone ever wondered why the exchange rate is so bad? This Chikwanda is allowing our forex to leave the country unabated. He is a wrong man to preside over our money matters.
One would think these ministers hate our country.
Why pay mines when you have also refused to introduce windfall tax
Can you listen to Action Aid-zambia
Perhaps there are characters in the Chamber of Mines that have an agenda to drive, one cannot help wonder why some Zambians are so emotive when it comes mining sector not giving Zambians what is due through paying taxes. It looks like these Zambians are only interested in securing their jobs with the mining companies. Is it becos one failed to make in ZRA and now has found a lucrative job with the mines that they push this useless agenda to the core? We know some of these boys have a knack for making quick bucks and will do anything to get to the top including supporting such rubbish at the expense of the country!These are the same boys who are running the Chamber and its useless sister association called AZMEC.
VAT Refunds are not just owed to the mines, there are several entities that are also owed and equally some govt institutions who owe govt. Mines are not special, they don’t want to pay taxes but would rather be refunded-what kind of thinking is that?