GOVERNMENT has been advised to extend its shareholding in mother corporations of local mining companies to reduce tax avoidance and evasion that is rampant in the minerals’ sub sector.
Recently, Financial Intelligence Centre assistant director Clement Kapalu disclosed that Zambia is losing US$3 billion annually due to illicit financial flows mainly perpetrated in the minerals sub-sector.
The Centre for Trade Policy and Development, with support from the Open Society Initiative for Southern Africa (OSISA), last year commissioned a study to determine how Zambia can adopt a mineral revenue sharing mechanism model that can propel the country to the level of Chile or Botswana which are both enjoying an upper middle income status.
According to recommendations of the report Zambia has continued to rely on taxes as the main source of financial benefit from the extractive industry.
“There is need to broaden this development in the face of rampant tax avoidance and evasion. Government should consider holding equity not only in the local subsidiary of multinational mining companies but their mother corporations as well.”
“This will allow Government to gain not only on a tax basis but on a dividend basis as well,” it stated.
And presenting the findings of the report, consultant Jewette Masinja said there is need to strengthen the voice of host communities and increase their participation in the review of mining legislation and policy framework.
“There must be a legal process for direct consultation with people, not just informing them but their opinions should be taken on board,” he said.
Earlier, OSISA representative Edward Lange said there is need to harmonise regional legislation policies for the benefit of people.