The Zambia Congress of Trade Unions (ZCTU) has asked Minister of Finance Alexander Chikwanda to take the Value Added Tax (VAT) matter for mining firms to cabinet.
ZCTU Secretary General Roy Mwaba said this is in order to allow the President and other Ministers to debate on it and come up with a concrete decision on behalf of all Zambians.
Finance Minister Alexander Chikwanda has come under fire from some sections of society over the Value Added Tax (VAT) general administration rule number 18 which requires government to refund tax to exporters that include mining companies.
Valued Added Tax rule no. 18 has been in existence since 1997 with the intention of making Zambian exports competitive through VAT refunds on exports.
Mr. Mwaba told ZANIS in an exclusive interview in Lusaka today that the trade union has been hesitant to comment on the matter which has attracted comments from members of the public from various sectors because of the sensitivity of the matter.
He said after studying the matter, the trade union feels the issue should be taken to a full cabinet meeting presided over by the President so that the Minister of Finance is not blamed for either paying or not paying the refunds to the mining companies.
Mr. Mwaba, who could not show whether he supports or opposes the idea to refund the mining companies, observed that the matter has potential to create unemployment in the mining industry if not handled well.
This VAT refund involves about US$600 million and mines are said to be planning to lay off over 20,000 workers once government refuses to refund them the VAT.
Meanwhile the Zambia Private Sector Alliance (ZPSA) recently stressed that the VAT rule 18 clause does not only affect the mining companies but all exporters regardless of the sector.
ZPSA chairman Geoffrey Sakulanda stated that the clause that requires exporters to submit import certificates from destination countries in order to claim VAT refunds help in the expansion of businesses and further in the creation jobs for Zambians.
Mining houses are not paying a fair share of taxes specifically corporate taxes. Just two months ago Mopani Copper Mines published its 2013 results which showed that total sales were $1.1 billion but corporate tax was only $22 million meaning it only paid 2% corporate tax as a ratio to turnover. There you have it Mopani only paid $22 million as corporate taxes yet the Government is required to refund it $200million out of the total $600million vat refunds.
The government should refund the mining houses involved once they produce authenticated documents and in the 2015 budget, the government should reintroduce windfall tax because some of these companies do not even appreciate the incentives they have been given.How on earth can one threaten to cut down manpower over an issue that can be resolved through dialogue and by producing the needed documents?
If it is law you don’t need to debate it. Just pay up and review the whole thing.