Kagem cleared of any wrongdoing after ZRA raid

Precious gemstones miner Gemfields has announced that the Zambia Revenue Authority (ZRA) has cleared its Kagem emerald mine following a probe into alleged tax evasion.

During an unnoticed visit, the ZRA seized documents and files including those allegedly used to evade payment of Value Added Tax (VAT), income tax, withholding tax and other taxes.

Probe was part of a wider effort by Zambia’s government to track down billions it is suspected of losing to foreign miners.

Gemfields said that the ZRA was unable to find evidence of wrongdoing or late payment by either Kagem or Limpopo Polygraphs.

The investigation commenced on 16 August 2018 when the ZRA served two search warrants during an unannounced visit to Kagem.

‘The search warrants authorized the ZRA to take wide?ranging documents and files including those allegedly “used by Kagem Mining Ltd / Limpopo Polygraphs CC to evade the payment of value added tax, income tax, withholding tax and other taxes,” a statement posted on the Gemfields website read.

“The ZRA has now advised Kagem that the matters it had been looking into have been suitably addressed. There were no findings of wrongdoing or late payment by either Kagem or Limpopo and as such no penalties were levied,” it further read.

The ZRA has confirmed that their investigation into these matters is now closed.  

Mining accounts for more than 70% of Zambia’s foreign exchange earnings.

The government is currently considering an increase to mining taxes and the introduction of new duties.

It also plans to replace value-added tax (VAT) with a sales tax and increase royalties beginning January 2019.

Zambia estimates that mining tax revenues will climb to $1.3 billion next year thanks to the tax increases, up from $800 million this year.

The Zambia Chamber of Mines, however, says revenues will rise to only $840 million approximately.