ZAMBIA Revenue Authority (ZRA) will soon undertake forensic audits of large mining companies to establish whether or not they have been complying with the various tax legislations administered by the authority.
Recently, Financial Intelligence Centre (FIC) 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, where tax evasion malpractices such as transfer pricing, over and under-invoicing and trade mispricing is rampant.
In trying to correct these flaws, ZRA is seeking the services of an auditing or investigation firm to undertake a forensic audit on a number of large mining companies.
According to a request for expression of interest, ZRA intends to engage a company to perform audits of identified mining companies to establish their tax compliance status.
“This audit will focus on value added tax (VAT) and will also aim to identify any other areas of non-compliance with legislation, fraud, tax evasion and avoidance schemes perpetrated by the mining companies to, on the one hand, minimise their tax obligations and maximise their profits on the other.
“The firm will be required to produce a comprehensive report outlining the issues observed and recommend ways in which ZRA should conduct future audits,” it stated.
It stated that the audit will cover the last five accounting periods of the identified mines and will cover most areas such as sales, production, finance, distribution, human resources, as well as import and export operations.
“The investigation will focus on establishing the completeness, accuracy and authenticity of the corporation tax, income tax and VAT returns submitted by the mining companies in relation to the underlying data and information from their business operations,” it stated.
It stated that the auditing firm will propose an appropriate time frame for the assignment indicating deliverables (output) and appropriate reporting lines commensurate with the stated objective.