MULTINATIONAL companies, including the mines have been taking advantage of the loopholes in the tax system by ripping off Zambia’s resources, Action Aid Zambia country director Pamela Chisanga has revealed.
And Ms Chisanga has welcomed President Edgar Lungu’s directive to Zambia Revenue Authority (ZRA) to engage in dialogue with the mining companies over the VAT refunds and the new mining tax regime.
Ms Chisanga said that the dialogue however needed to be led by the Ministry of Finance as the policy-making organ in consultation with the Ministry of Mines and ZRA.
She said President Lungu’s directive will result in a win-win situation for both the country and mining companies.
“This calls for transparency and accountability on the part of the mining companies and strengthening of monitoring mechanism on the part of Government to avoid reliance on mining companies for critical information such as production figures,” she said.
Ms Chisanga said according to Action Aid findings, it was clear that Zambia was being ripped off by multinational companies, including the mines who were taking advantage of the loopholes in the tax system.
She said Zambia should undertake a comprehensive review of the mining tax regime and administration as they addressed the challenges of the newly introduced mining tax regime.
And opposition Forum for Democracy and Development (FDD) spokesperson Antonio Mwanza said the directive by President Lungu to ZRA was a correct move on the part of Government.
Mr Mwanza said FDD had consistently called for dialogue on the newly introduced mineral royalty tax.
“We need to harmonize the tax code in line with the prevailing operational conditions of the various mines,” he said.
Mr Mwanza said it was important for Zambians to resolve the impasse in an amicable manner in order to secure jobs and future investments.
He said a flat/single tier tax system might not be the ideal one for all the mines because of their varying operational costs, development stages and quality of minerals produced.
Mr Mwanza said in future there would be need for Government to maximize revenue from the mining industry.
“We cannot just be relying on taxes, moreover there is a lot of tax evasion, price transferring and fraud going on in the mining sector largely due to lack of capacity by ZRA to deal with these issues,” he said.
Mr Mwanza said the country needs to invest in manufacturing and processing side of the mines in order to add value to the raw materials, increase foreign exchange earnings and create jobs for youths.
He said Zambia would also need to empower and give preferential treatment to local suppliers and cut down on the dominance of foreign companies as major suppliers of goods and services to the mines.