Thursday, March 28, 2024

First Quantum Minerals denies K76.5 billion tax scam

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FQM President Clive Newall
FQM President Clive Newall

First Quantum Minerals Ltd has refuted a tax assessment issued by the Zambia Revenue Authority accusing the firm of failing to declare over K70 billion in taxes.

In a statement, the Canadian based miner said claims made by ZRA regarding underpayment of customs duties are untrue.

FQM President Clive Newall said his firm confirms that it is in possession of a letter from the ZRA, dated March 19, 2018, noting an assessment for import duties, penalties and interest on consumables and spare parts of 76.5 billion Zambian Kwacha.

Mr. Newall however said FQM unequivocally refutes this assessment which he said does not appear to have any discernable basis of calculation.
He said FQM will continue working with the ZRA, as it normally does, to resolve the issue.

First Quantum’s stock dropped 12.4 percent to C$18 on the Toronto Stock Exchange before it was halted.

On Tuesday, the ZRA revealed that it had uncovered $8 billion tax scam at an unspecified “prominent mining company”, nearly double the total amount the country collected in taxes in last year.

The ZRA said it had issued a preliminary tax assessment of 76.5 billion Zambian kwacha to the unnamed company for classifying imported goods as mining machinery, which attract no custom duty.

He said the import duty on items other than mining machinery ranges from 15 to 25 percent, ZRA said adding that the company had been engaged in the conduct for the last five years.

“We have since notified both the mining (company) and the clearing agent of this unacceptable act of cheating,” ZRA said, without naming the company or the clearing agent.

ZRA’s assessment suggests the total value of goods imported goods was between $30 billion and $51 billion if about $8 billion is unpaid levy charged at between 15 and 25 percent.

Almost a year ago, ZRA Commissioner General Kingsley Chanda invited companies and people living in Zambia to declare their hidden assets in tax amnesty.

The ZRA said in a statement that Zambia, which collected 39.1 billion kwacha in taxes last year, netted 4.4 billion kwacha in hidden assets from the amnesty after smaller companies stepped forward.

The Zambia Revenue Authority may extend the period of the audit should it find a pattern of “consistent, systematic, premeditated” tax evasion, it said in a statement.

“We are announcing the preliminary assessment of 76.5 billion kwacha issued to a prominent mining company for misclassifying consumables and spare parts at importation for the last five years,” the tax authority said, without identifying the company. “The said items were declared as mining machinery, which attract customs duty at zero percent, when in fact not.”

It added, “Last year, the amnesty on interest and penalties was announced to allow tax payers to clean up their tax accounts. Those with issues were expected to engage ZRA and have a waiver on interest and penalties. A post amnesty review shows that only small and medium companies stepped forward and the Authority raised about 4.4 billion kwacha from the programme. Unfortunately, most large companies did not participate despite numerous reminders and extensions.”

“We would like to assure the public that the amnesty programme was not a joke and our promise to deal with non-compliance is real. In line with this objective, the 2018 theme for ZRA is “Rewarding compliant tax payers and punishing non-compliant tax payers to the maximum”. The Authority has therefore started detailed audits on all mining companies for compliance in all applicable tax types in order to ensure all taxes due are collected.”

The Authority said, “The planned audits will cover the statutory period of 6 years to start with. However, if the findings will review a pattern of consistent, systematic, premeditated cheating (tax evasion), we shall criminalise the act and cover longer periods to achieve the intended objective.”

“We are taking this case very seriously and we shall pursue all available options to the Authority to recover all taxes on behalf of the Zambian people. We also wish to announce that starting 26th March 2018, our investigation teams and auditors will commence the audit of all mining firms in Zambia. We are, therefore, appealing to all other companies and players in the Mining Sector that may have been involved in illicit tax activities to make self-disclosure before we discover them. This will help them minimise their exposure to penalties and interests.”

It warned, “To those that are evading tax or contemplating doing dubious activities, our warning to them is to stop immediately and start complying. The Authority will definitely catch up with them and take all measures to collect taxes, penalties and interest due.

78 COMMENTS

    • Nostradamus maybe if it was the PF making the accusations it would make sense for you to ask your questions. But it’s ZRA and the explanation is there on how the company evaded tax payments. In fact the company rep says they sort it out with ZRA as they have always done it before in the past.

    • That is the first reaction a thief would do, then unleash every single operative which includes the stooges in their pocket in all government departments regarding this matter.

      They will move heaven and earth and the st.upid people will help them. FQ will pay any money for this and next you will hear is that there was an error on the part of ZRA.

      I hope this is not the case.

    • White people have no conscience. They have been stealing from us for hundreds of years. It’s us they are laughing at for being poor. They would not admit they are the ones responsible for our poverty. That is how cruel they are. We fought for independence. That has not helped us a single bit.

    • If ZRA for 5 years could not tell this wasn’t Mining Machinery how can they provide convincing evidence in the case in retrospect after these goods were brought in and used???? Also how come heads never role at ZRA whenever such scams are exposed we only see defaulting or evading companies punished when obviously there was collusion with officers at ZRA

    • kikikikikikiki…….joke of the year. Nothing will happen to this mining company. ZRA only bullies ordinary citizens, they dance to the tune of mining companies. Ever wondered why every now and then new taxes are being introduced whilst old ones keep on rising? Well, it all goes back to the taxes which mines refuse to pay, they are passed on to you and me. Watch the space, the days for Topsy Sikalinda are numbered at ZRA!

    • Not with Margaret in charge of Finance, the Treasury and ZRA. This woman is tough and she is going to make sure all taxes owed are collected for the smart people of the Zambian Enterprise.

      All tax evading companies better get their act together as once their penalties and interest accrue, they will end up with a huge tax bill. In the US, you don’t want to mess with the IRS (Uncle Sam) because you usually have no recourse except compliance.

      It’s time we become serious pa Zed because if everyone complied there would be better service delivery, smooth debt servicing, better social transfers and less pressure on the Treasury while building reserves.

      Let’s roll …

    • Thats why we need fellow Africans to invest in Africa not allowing these money hungry and crooked bazungu stealing from us in broad daylight.
      Isabel Dos Santos please buy Quantum mining if you can afford it

    • B R Mumba, Jr sit down not with Maggie in charge you say as if she is someone of high integrity …FYI this assessment started long before your Maggie and Felix came along …I mean this is woman who borrowed CEEC loan and never paid back.

    • That’s white people for you, they are refuting it saying the calculations are wrong by ZRA…I bet you back in Canada they are saying the miscalculated and don’t know what they are doing. If this was British Inland Revenue or US Tax Office they would dare state this especially when the are tax evading …I hope that utterly lazy shameless corrupt moron we have in State House who does not know the importance of tax and regulations will not interfere this time after FQM promises a donation or a few coins of copper.

    • So the fools are just waking up now and that is exactly where their taxes are not on poor Zambian landlords earning less than K1000 from utuboba rentals.

    • Just st r adu f the thing dues not make sense. It would be a miracle fir a mine to cost $51bn. No mine in the works ever cost that amount in capital goods not even in 5 years. That’s us$20 per year.
      What a country of wankers

    • Sorry typing for the phone….

      It just does not make sense.. US$51 billion in capital goods in 5 years??? Show me any mine in the world which cost that much. We have worked on these projects before. Thats US$10bn per year for 5 years.

      What a joke… you are a country of wankers can even count. US$51bn spent in a country of US$18bn??? and know one knew for 5 years? You must be joking. A dredge line the most expensive equip on that mine costs US$200m. 15 X 260 ton trucks at US$30m each. The plant at US$300m, Excavators, loaders and drill drugs another US$300m, Housing and all infrastructure at another US$350m. Put another +- US$100m

      That mine can never cost more than US$4bn. Tenkefugulume in Congo which is much larger cost US$3.7bn

    • The value of the world biggest mining company BHPBilliton is US$74bn it has operations in 27 countries. A mine in Zambia costs US$51bn?

      If a countries revenue collector can not even count… something has gone way wrong. The country does not even know how much debt it has….

      This is why the rest of the world thinks we still baboons

    • @ Mwape thanks for even putting it better

      An african might be good at boxing or soccer, but physics and simple elemental mathematics is not for him.

      Lets think :

      Zambia copper output : 800,000 tons
      Price: $7000

      Value of copper: 5,6billion dollars

      Value of whole country GDP: say $25billion for every man woman child and every company

      Now if the 15 or 25% tax cones to 7,6bn it means the value of the imports was $30bn

      So FQM imported $30bn of spares in a country where all mining companies generated $5,6bn of copper

      FQM imported $30bn of spares into a country whose entire overall GDP was $25bn

      Stick to boxing

    • You go to Europe and steal a needle. They will imprison you for life. These Europeans come to Africa and steal billions. We give them red-carpet reception. We literally worship them for stealing from us.

    • @ Meimatungu- The whites are not heartless as such. They have just exploited the stupidity of those assigned to look after the resources of our countries. It is not a scum but a collusion. Times have just caught up with them. Remember they were denied IMF bail out. Now they have no choice but just look within with shame of coarse.

    • This problem of tax evasion is complex and as Zambians we need to wake up beyond political affiliations if this country is to develop. Are we not ashamed that we can always talk of how we were almost at the same level with South Korea economically during the Kaunda regime?
      My suggestions are;
      (1) The government needs to take the fight against corruption serious – let the culprits be jailed.
      (2) Zambian employees or contractors who are part of such schemes to help foreigners steal billions through tax evasions need to be disciplined or simply blacklisted in their respected professions.
      (3) ACC can do better than the joke of what is happening – they must come up with a mechanism to protect and reward whistle-blowers who help the nation identify and recover such loss.
      (4) Government…

    • All foreign Companies steal from Zambians. We are stupid people because we always think Muzungu and Foreign are better than us. Only if we start respecting and appreciating ourselves will we prosper. These Mines are a Joke. We messed up as a country and its resources.

  1. As if they can admit? DRC introduced heavy taxes on minerals especially cobalt. The mines were not happy and threatened to pull out but Kabila stood his ground. The next thing the mines did was to pull out of the Chamber of Mines because it “failed ” to represent them adequately. They are still in the DRC.

    • Zambia’s leadership walk around the face of this planet with their foot in their mouths. They’d rather scheme along with a foreigner as long as their families are ok. It’d be s surprise if Zambia would recollect any grey matter as a nation to resolve this.

      This is comedy / drama, am getting the popcornes.

    • Mr.Khakis, we agree on something here, but I am interested to know if you agree that the PG govt and Edgar have no capacity to tax the mines effectively ?

    • Obatala, government has the capacity but too much politics from all concerned is the biggest set back. We easily get intimidated by the investors. ..they threaten us with redundancies and the opposition takes advantage. .even PF as an opposition party is guilty. ..remember when Mwanawasa introduced the windfall tax Sata was opposed because that was going to scare away investors especially after the departure of Anglo from KCM. Kabila being a dictator doesn’t care about what others say. ..he can even put off elections at will. What we need is for everyone to stand up to these investors. ..they can walk out but they won’t take our minerals from our earth.

    • Circus of a country, from rigging, tax evasion, money laundering, corruption, nepotism … Still can’t believe ballot papers can be stollen and buried in cemetery – “We challenge Kaizer Zulu and Mumbi Phiri to deny if they never told us to bury Hakainde Hichilema’s votes at Kalulushi cemetery. Upto now we know where the UPND ballot papers are buried at Kalulushi Cemetary.”
      Meanwhile Kambwili is being harassed for speaking out on corruption. Lolo Lolo.

  2. We have long told you that in order to raise sufficient revenue,focus should be on mines and multi nationals who are involved in sophisticated tax avoidance and evasion.You also need to hire foreign experts to workin mining tax to work locals to audit them and ensure they are not compromised.Zambian citizens are overtaxed while foreigners are getting away with murder.I hope the powers that be do not intervene after a few threats from these mines.Our leaders,please be Patriotic for once,this is a good windfall and will go a long way to resolve our cash problems.

    • Next thing you will hear that FQM, Mines Minister, Finance Minister are locked in a closed door meeting without ZRA…just know that another a agreement or parachute has been handed to them by the very people we have voted in…no matter how much hard-line talk ZRA gives the big mines do not care; that’s why they didn’t bother with the Amnesty only small mines came forward.

  3. I have been vindicated.I wrote on illicit financial flows,tax avoidance and tax evasion by mines and mncs.My appeal to Gvt and President Lungu is stay away and be firm like Magufuli and Kabila has done.This will help your popularity Mr.President.Zambians are annoyed about being over taxed while foreigners like mines pay a pittance.Please call any mines’ threats that may follow bluff.DO NOT INTERFERE.They need us and much we need them given the high copper prices and expected boom due to the electric car revolution.

    • You are wishfully thinking; Lazy Lungu does not respect the law or knows the importance of paying tax …the dumb foool will interfere like he did at ZCCM.

  4. Africa being robbed blind and then we’re called lazy ,corrupt and not industrious .Switzerland and London have a lot of guilt to share for this poverty they’ve aided these tax scams

    • Yes you are right, but in these recent circumstances, it is OUR OWN PEOPLE PERPETRATING these scams JUST LIKE IN SLAVE TRADE DAYS, THERE WERE AFRICAN COLLABORATORS!

  5. It took a European based NGO to expose a scam in which Glencore were cheating our country on mineral exports. The report detailed how the company was exporting the metal under some reason but disposed of it differently and at a higher cost than the original reason. Up to now nothing has come out of it after more than 15 years.

  6. I don’t think this issue requires publicity, until evidence is uncovered and proved. Very unprofessional, this ZRA

    • What evidence? Sometimes I wonder what you people want. One minute you’re accusing the ZRA of allowing foreign companies to flout our tax laws, next minute you’re accusing them for exposing a scam committed by the foreigners.

    • They have done an assessment based on documents and other “evidence” provided by the mines and others in the chain of importation. What evidence do you want? someone to stand in court? SMH

  7. It’s business as usual! They will call on Lungu and nelyashi epo likapwila.. …..kaBrown envelope!

  8. Having undergone ZRA audits several times, and at one time one that included a stock reconciliation, I doubt if ZRA will collect more than 10% of that amount. Those inspectors, most of whom are teachers, have a tendency to exaggerate and sensualise issues but have difficulties with accounts reconciliations. They need to employee more accountants and not teachers

  9. I thought the Post newspapers were liquidated based on similar claims by ZRA. Let us see them move in similar fashion on First quantum mines. If they do not then the post was closed because of politics. Move quickly ZRA. We need the money for hospitals not boreholes tax.

  10. nothing will come of this just like other scums we see reported by NGOs and in the AG report..there is no political will

  11. This is what happens when the party in government engages a mining company to roll out their campaign support just to remain in power. In retrospect you turn a blind eye on their tax evasion and avoidance and in turn lose billions of dollars because your interest is to be in power at all costs. FQM will not pay you this money otherwise they will threaten you with pulling out and there is nothing you can do about it. We have reckless leaders whose preoccupation is to fatten their bank accounts and nothing more. You cannot fight the hand that is feeding you PF. Where are you getting the money to pay for all the bicycles and other campaign materials?

  12. Foreign corporations are too powerful. They will make a joke out of ZRA and the government and Kingsley will probably be fired by the forces that be.

  13. What is interesting is that just one tax assessment to the mines is sufficient to :

    PAY OFF ALL 3 EUROBONDS

    Twice Over !!

    Makes u think !!

  14. The results of this will do a lot towards gaining a bit of confidence in ZRA or completely rubbishing them as a bulldog bent on biting the Africans and leaving the whites to continue pillaging our resources. There is absolutely no justification to citizens of a resource rich country paying taxes at 40%+ while we hear colonisers are making fortunes and building towns in their lands out of our resource..

  15. ZCCM should become a full-fledged mining operator again as foreign operators prove to be crooks. ZCCM as minority share holders should take back its mining concessions managed by foreign companies.

    • ZCCM FAILED MISERABLY. IT WAS RUN BY ZAMBIAN CROOKS WITH NO TAXES PAID ALL..
      ZRA SHOULD JUST BE GIVEN TEETH TO BITE.

    • The original setup worked well where GRZ owned 51% each in NCCM and RCM. Most top positions were held by representatives of the holding companies viz Anglo and RST. The government was represented by Mr Kaunda and Mr Phiri as Managing Directors. Zambians would only go as far manager admin.or mine manager. Problems started after the merger of the 2 companies into ZCCM. The late later said that if he had been consulted on the merger he was going to oppose it. Apparently the merger announcement was made while Mr Phiri was overseas on company business. …we believed it was a ploy by KK to keep Mr Phiri out of the way.

    • Revive ZCCM. what we have now is like a dog chasing its tale. We are just being ripped off. ZCCM will keep the jobs that the mines have now and we export the copper. Right now there are endless consultancy programmes at the mines, expatriates for jobs for which we have skills and some we are exporting to the DRC etc. Selling mines was the worst treason ever committed in this country.

  16. I have evidence that Chambishi Metals and Mopani use the same ploy to defraud ZRA.
    Two methods are used to achieve tax savings, namely:
    1) Bring in “operating” spares and equipment and declare them as CAPITAL items, and
    2) Shadow pricing. That involves a third-party supplying the goods at a “knocked-down” price. FQML uses the Perth office to execute this function. Likewise, Chambishi Metals uses their Johannesburg office

    • @18 Sunny Desai.. I SUPPORT YOUR OBSERVATION, IT CAN’T BE ONLY ONE MINE PLAYING TRICKS! ALL OF THEM REQUIRE DEEP AND EXTENSIVE AUDITS!! A lot can be uncovered but the problem is EVERYTHING IN THIS COUNTRY IS POLITICIZED, even this announcement could have come out as a matter of politics!!

  17. ZRA needs to get undercover Indians to find out how the mwenyes are duping ZAR to underlay tax. They have syndicates for mwenyes to dupe ZAR and are externalising hudge amounts of funds ….

  18. @2 and 2.3 Ndanje..AGREED, IT IS A QUESTION OF UNIT OF PURPOSE as A NATION!! In Zambia mining companies have found a free-way bcoz we have become so disorganized and so unpatriotic! THERE ARE EVEN OPPOSITION LEADERS WHO SIDE OPENLY WITH THE MINES,POSING AS ALTERNATIVE LEADERSHIP TO WORK WELL WITH MINES(2015 election campaigns showed it all) even when we know mines have been ripping us off!! FQM was chased from DRC for refusing to agree to revised mining contracts, here in Zambia they ride roughshod!! At this stage Kabila is NOT LIKED IN DRC BUT NOBODY(except mines) HAS DISAGREED WITH HIM ON THE REVISED TAXES! In Tanzania there is democracy too BUT THEY AGREE with Magufuli on taxing the mines fairly and making them more accountable!

    • What do you call PF under lungu signing a 40 year agreement with mopani in 2015 to freeze electricity prices , ? For 40 years mopani will be paying non market prices for electricity ??

      What was that , corruption ? or being unpatriotic ??

    • @20.1 Spaka, it is BOTH, corrupt people especially those in high office are unpatriotic! But the point stays, WE NEED A NATIONAL CONSENSUS on how to DEAL WITH THE MINES so that they DON’T PLAY US AGAINST EACH OTHER!! HOW can a mature politician campaign against well being of his own country WHEN ACTUALLY HIS MPs HAD VOTED UNANIMOUSLY FOR BILL THAT REVISED MINERAL ROYALTY TAX but when it was implementation time he speaks against the same bill and sides with mines, THE FOREIGNERS WHO LEAVE US WITH CRATERS!!

    • I agree, someone needs to bang lungu and HH heads together…….but in my view PF and lungu have alienated the opposition by not playing fair and free and using state violence to brutalize them and silence the opposition.
      PF are not winning free and fair where everybody says ok , they won hands down , let them and us work.

  19. These mining houses are accredited clients of ZRA on imports.
    So their declarations are not examined by ZRA AND ZRA audits these mine mines once every 5 years.
    These issues come up during such audits

  20. Too much tax dodging in Zambia. Audit everyone with wealth like Uncle Sam does. For instance, what tax do those who claim to be wealthy like HH and GBM have paid on their way to riches?

    Also these prancing Lawyers, do they pay PAYE every month? And why does LAZ give practicing certificates without tax clearances?

  21. Mine have been stealing from Zambians for a long time.
    Besides copper these other minerals been exported.
    Let Govt ban export unprocessed export of copper.

  22. I deeply wonder where this Zambia is going why are we so reckless in Zambia especially these leaders. It seems no one has a heart for the poor Zambians Zra keeps on heaping more and more taxes on Zambians while these fools the whites keep on stealing our resources. oh how I cry for this land because this is not how we are surporse to run our country. We can do better than this by investing and fully own mines operated by Zambians let’s not be threatened by investors of saying they will pull out let them pull out these *****s make a lot of of money at the expence of our fear of them pulling out. I get so disturbed each time I think of the huge Salary gap that is between the Zambians and these so called expatriates in the mines what is the labor department doing about this? And you the…

  23. An african might be good at boxing or soccer, but physics and simple elemental mathematics is not for him.

    Lets think :

    Zambia copper output : 800,000 tons
    Price: $7000

    Value of copper: 5,6billion dollars

    Value of whole country GDP: say $25billion for every man woman child and every company

    Now if the 15 or 25% tax cones to 7,6bn it means the value of the imports was $30bn

    So FQM imported $30bn of spares in a country where all mining companies generated $5,6bn of copper

    FQM imported $30bn of spares into a country whose entire overall GDP was $25bn

    Stick to boxing

  24. Its like the 3 million hectare saga

    100 hectares = 1km x 1km

    To get to 3 million hectares you need 170km x 170km

    A square of 170km on each of the four sides of the square

    If you drove round that square its 680km. It shorter to go to mongu or to chipata from lusaka than to drive around this farm

    Fellow boxers : think it over and agree its misreporting, the figure cant make sense

  25. Yes, #changetherules. The west offers us aid in millions and gets away with billions in tax evasion. Bravo ZRA, tax them more. If they won’t give us back our mines, take them by surprise. Our resources, our rules.

  26. An important point.

    This is a tax assessment that is being disputed as to the amount owed, or whether it is even owed.

    The Post deducted PAYE from workers but never remitted that PAYE over to ZRA.

    In a similar vein, Post added 16% VAT to their newspaper price. This was supposed to be paid over to ZRA

    They NEVER paid PAYE over to ZRA for 6 years.

    How can there be sympathy for outright theft and how can Boma be told they are settling political scores .

    It’s very different from FQM issue where one says you owe but the other says I don’t owe.

  27. Let’s wait and see, this is a game for big boys and girls…by the way what happened to the mukuka trucks that were impounded at beit bridge? ZRA uncovered a” big scum” but its quiet now. Lets wait and see.

  28. Three mansions! Anyway, they have been evading for a long time. Just get to the evidence and clost the Panamagate Money Laundering.

  29. AAccording to some respectable journal the report has caused the company to lose substantially on the Stock market.

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