Zambia withholding $243 mn in tax refunds owed to mining firms

PUBLISHED: Wed, 28 Dec 2016 20:12:26 GMT

Zambia is withholding 2.4 billion kwacha ($243 million) of the 5 billion kwacha owed to mining companies in tax refunds because the correct documentation has not been provided, the tax authority said on Wednesday.

Zambia’s government began paying up to 800 million kwacha a month in Value Added Tax refunds to mining companies in June, aiming to put an end to a long running dispute in which firms were owed about $700 million.

Some funds are being withheld because companies have not provided documents showing the export destination, Zambia Revenue Authority head Kingsley Chanda told reporters.

Glencore’s Mopani Copper Mines, First Quantum Minerals, Barrick Gold and Vedanta Resources all have operations in Africa’s No.2 copper producer.

Chanda said low copper prices and the depreciation of the kwacha this year hit mining companies, leading to a 1 billion kwacha drop in expected tax collection.

Zambia is also withholding 40 million kwacha every month from South African-based exporters of petroleum products as they do not qualify for tax exemption under a regional agreement.

Most of the petroleum products coming from South Africa were initially imported from Saudi Arabia or Kuwait, countries that don’t have a trade agreement with Zambia, Chanda said.

Sign Up for Our Newsletter Daily Update
Get the best of CNBC Africa sent straight to your inbox with breaking business news, insights and updates from experts across the continent.
Get this delivered to your inbox, and more info about about our products and services. By signing up for newsletters, you are agreeing to our Terms of Use and Privacy Policy.