Maravi

Mining firms, govt in K247bn discrepancy

COMMENT - K247 billion, at K5000/$, that is $49.4 milion. The mines should be paying $1100 million in taxes and dividends. My guess that this $49.4 million goes some way into explaining why they don't, and why the MMD is not keen on levying taxes or receiving dividends from the mining sector.

Mining firms, govt in K247bn discrepancy
By Chiwoyu Sinyangwe
Thu 24 Feb. 2011, 04:00 CAT

AN independent reconciliation has revealed an absolute discrepancy of K247 billion between what mining companies paid and what the government received in 2008. And the reconcillors said the mines and the government agencies were not fully supportive towards the independent reconciliation report.

The independent reconciliation, the first ever report in Zambia's implementation of the Extractive Industries Transparency Initiative (EITI), indicated that there was a net discrepancy of K12.31 billion.

According to the report by the Zambian branch of the accounting firm, Price Waterhouse Coopers (PwC), and based on the 2008 audited books, the discrepancy was caused by among other things, problems of documentation, exchange rates, and lack of supporting documents.

“The discrepancy does not represent missing payments from extractive companies but rather discrepancies which we have unable to investigate further and conclude thereon due to limited supporting documentation and limited time frame of the independent reconciliation,” said PwC Zambia director Nitesh Patel during the presentation in Lusaka on Tuesday.

The findings of the independent reconciliation report, a crucial component for Zambia to become a compliant country to EITI, also revealed that 86 per cent of the unresolved discrepancies had arisen from four payment streams - namely, non-refundable VAT accounting for 35 per cent, import VAT at 26 per cent, customs/import duty at 16 per cent and corporate tax at nine per cent.

“Of the total discrepancies of K421 billion, approximately K174 billion of these discrepancies have been resolved, leaving K247 billion of unresolved discrepancies,” said Patel.

PwC stated that in some cases, there was no consistency between supporting documents and the information on completed reporting templates.

“A number of mines and agencies did not provide us with documentation to support the amounts reported on the completed reporting template,” said PwC. “A number of parties in the exercise misunderstood the payments and receipts requested for. Information related to payments made through the third parties like clearing agents was not easily accessible by some parties."

Mines minister Maxwell Mwale said the challenge of Zambia EITI was to follow-up on the discrepancies and take remedial action.

Mwale also directed Zambia EITI to start the reconciliation process for 2009 and 2010 reports.

“I am, therefore, directing the EITI council to investigate the source of the discrepancy,” said Mwale.

“The independent reconcilers have suggested areas of improvement for future reports and hence Zambia EITI Council should take note and ensure these recommendations are implemented.”

Some of the highlights in the report included certain reporting standards which indicated the government collected more revenue than what the firms paid.

EITI aims to strengthen governance by improving transparency and accountability in the extractives sector by improving governance in resource-rich countries through the verification and full publication of company payments and government revenues.

Labels: CORRUPTION, EITI, MAXWELL MWALE, VAT

posted by MrK @ 2:42 PM