Maravi

ZRA can’t audit mines - Mpande

ZRA can’t audit mines - Mpande
By Mutale Kapekele
Wed 01 Dec. 2010, 04:00 CAT

THE Zambia Revenue Authority (ZRA) has no capacity to collect income-related tax from the mines, says mining expert Dr Mathias Mpande. And Alliance for Democracy and Development president Charles Milupi, who had a long career in the mines, says Zambia stands to lose US$600 million in mining tax as a consequence of scrapping off windfall tax.

The government has introduced profit variable tax, an income tax, to replace the windfall tax that was introduced in 2008 and scrapped off four months after the death of president Levy Mwanawasa, the pioneer of the latter.

Speaking at the Council of Churches in Zambia (CCZ) debate on creating a prosperous society, Dr Mpande said it was close to impossible for ZRA to audit mining firms as most of them were controlled from headquarters that were outside the country.

“ZRA has no capacity to collect income related tax because they have to audit accounts (for the mines) before they could determine the profits. Some accounts are maintained in dollars at their (mines) headquarters,” Dr Mpande said.

“Some accounts are in Switzerland and mines like Mopani don’t even know where their copper goes, that is not Zambia’s copper, it belongs to Glencore. How is ZRA going to follow the trail? Any minister that is saying ZRA will audit is cheating.

He said tax should not discriminate and if workers were paying Pay As You Earn (PAYE) of 35 per cent, even the corporate world should be charged as much.

Dr Mpande said it was scandalous for the government to refuse to collect tax from the rich mines but was keen to collect value added tax from salaula traders.

He said windfall tax was not a mining tax but a benefit to the people.

Dr Mpande wondered what was special about the mines when the banks had been paying windfall tax for a long time.

And Milupi said Zambia would have accumulated more than US$600 million had it maintained the windfall tax.

“Through their submissions when they applied for investments, the mines indicated that at US$3,300 per tonne, they were expecting a return of 15 per cent. That means they are making huge profits since the price has more than doubled and next year it is expected to be even higher at US,000 per tonne,” Milupi said.

“We need to tax those excess profits. If we calculate the total sales for next year at US$8,700 less production costs of about US$7,500, the mines total sales will be in excess of US$6 billion and that is almost double the country’s total expenditure for 2011 which stands at US$3.5 billion. How much of that US$6 billion should remain in the country?”

Milupi said in 2008 and 2009, the country could have collected close to nothing from the windfall tax but the figure could have risen in 2010 to US$600 million.

Labels: CHARLES MILUPI, MATHIAS MPANDE, MINING, TAXATION, WINDFALL TAX, ZRA

posted by MrK @ 3:22 PM