Mines still required to produce export documentation – ZRA

ZAMBIA Revenue Authority commissioner general Berlin Msiska says mining companies pushing for the accumulated VAT refunds will still have to produce export documentation because “law is law”.  Last month, the government relaxed its rules on the documentation mining exporters need to claim tax refunds. The row over how mining companies account for the minerals they export from Zambia  had led to more than $600 million in VAT refunds being withheld from mining companies. Industry pressure on the government to pay out the refunds owed prior to the amendment of the regulation remains high. But Msiska, in an interview, said mining companies and other exporters are still required to produce import certificates for them to claim refunds owed prior to the amendment of the VAT rule 18. Mining companies have argued that it is almost impossible to produce such documentation because they sell to multinational trading houses, and have for months been pushing for over US$600 million they are owed.

“Law is law and all persons or companies are supposed to comply with that law,” Msiska said. “So even under the new law, if you look at the way VAT rule 18 has been amended, there is still a requirement for you to produce export records from the country of destination but amended to include the country of transit.” He, however, explained that the VAT rule had been relaxed and the authority now accepts transit documents from exporters claiming VAT refunds. Msiska further said exporters would no longer be required to prove that their export proceeds had been remitted into a bank account in Zambia in order to claim VAT refunds.

“We amended the rule 18 and exporters seem to be happy with the amendments,” he said. Asked the impact the country’s tussles with miners over value added tax as well as  royalties would have on revenue collection targets, Msiska said ‘it was too early to tell’. “So far, we have only done January, February and we are now in March in terms of revenue collection and it is too early to analyse the numbers and the real impact on our revenue collection [target],” said Msiska. “But we might be able to achieve the target, especially if the fundamentals in the economy in terms of the exchange rate improve over time.”

The ZRA is targeting to collect K31 billion this year, but the current impasse with miners over VAT as well as royalties threaten to reduce revenue collection, investment and growth in one of Africa’s most promising markets. The government in January implemented the new mining tax regime which raised royalties to 20 per cent and eight per cent for open cast and underground mining operations, respectively, from the previous six per cent. But the mines have refused to pay the new taxes, pressing the government to revert to the old tax regime, with the Chamber of Mines threatening that over 12,000 mining jobs are on the line if government refuses to hear their concerns.


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