|Chanda---VAT refunds have been stepped up. Pix: Muvi TV|
April 24 (Zambia Informer) ------- Mining companies are still owed a staggering K1.5 billion in Value Added Tax refunds as the Zambia Revenue Authorities (ZRA) makes strides to resolve the outstanding arrears, Kingsley Chanda, the Commissioner General for the Agency says.
Addressing Lusaka-based Journalists in Lusaka, Chanda stated that about K3 billion has been paid to mining companies that are complying with the demands by the agency to provide receipts and relevant documents relating to their claims on goods and services rendered including export receipts on copper exported and were charged VAT.
“We have made tremendous progress to resolve the outstanding VAT from mining companies and so far we have paid out K1.6 billion and we are yet to resolve the outstanding K1.5 billion,” Chanda said in Lusaka, Monday. “The response has been very good from the mining companies,”
The ZRA urged mining companies seeking to secure their refunds to expedite their documentations as well as receipts adding that the agency has revised the refunds per months to K820 million from K700 million a month since June last year.
As at November last year, mining companies received a staggering K5.5 billion (US$495,000) in VAT refunds as part of the Government’s commitment to dismantle the outstanding US$600 million it owed the mining companies for various services.
The Zambia’s Government and the mining companies have had pitted differences since 2014 over the call to dismantle more than US$600 million owed to the multinationals in export receipts.
This delay led to some of the mining companies opting to close down their businesses as they did not have enough capital to invest in their projects.
Others were directed by their shareholders, including Mopani Copper Mines, of Swiss-based Glencore International Plc to pursue the outstanding debt for onward investment in new projects before supplementary funds could be released by mine owners.
ZRA had earlier hinted it was only going to provide refunds based on verifiable receipts showing the goods and services or exports or transactions where there is a legal requirement to ensure that all zero rated exports satisfy the requirements of VAT Rule 18.
“We have disbursed about K5.5 billion to mining companies in VAT based on verifiable receipts,” Chanda had stated in an earlier interview.
Earlier, mining companies, through the lobby, the Zambia Chamber of Mines’ Chief Executive Officer, Talent Ngandwe had confirmed the commencement of the reimbursement to mining companies in VAT adding: “Yes we are aware of funds being given out to mining companies but we can’t quantify the actual amount paid to date.”
The row over VAT refunds has remained a heated matter with some of the mining companies closing down. Sable Zinc, the Kabwe based mining company closed its doors in 2015 after Government delayed to refund it over US$48 million.
Konkola Copper Mines had earlier been owed over US$260 million until after it secured about US$100 million in VAT. Mopani Copper Mines, owned by the Baal based miner is owed over US$200 million, First Quantum Minerals Limited owned Kalumbila and Kansanshi are estimated to be owed over US$300 million, with several others owed various amounts still awaiting to have their debts owed in VAT resolved, a delay which had affected their capacity to sustain operations.
During a recent ZAMBIA Mining and Energy Conference (ZIMEC) indaba in Lusaka, Mopani Copper Mines chief executive Joan Jansen lamented the delays in refunds of VAT.
He had argued that the shareholders had insisted that the debt owed to the company in VAT be refunded first before other resources could be released for onward development of new projects in Zambia including the US$325 million syncronorium shafts in Kitwe expected to elongate of the mine lifeline to over 25 years.
However, the mining companies had earlier faced challenges with regard to VAT refunds including extended period of filing in of VAT returns and the actual disbursement of refunds from 30 to 60 days, said chamber economist Shula Jalasi-Shula.
The increased delay in receiving refunds presented cash flow problems for mining companies, a matter which was justified by former .
the revenue agency was paying VAT to mines through bank transfers and not using cheques as was the case in the past.
As a result of using bank transfers, any incorrect bank details may contribute to delays in paying out the refund. The increase in delays was largely on account of the taxpayers not submitting the required documents for verification on time.
“Some taxpayers have Penalties and Interest which they may not be aware of and ZRA will refund net of any outstanding liabilities. “However, we do endeavor to reconcile the Taxpayers account with the taxpayer to avoid misunderstandings,” Mumbuna Kufekisa had earlier stated.
Finance minister Felix Mutati had earlier hinted that Government was willing to spend 25 percent of the 2017 budget-estimated expenditure at US$6.5 million (K64.5 million) was planned to be spent to dismantle arrears owed to various suppliers of goods and services to reduce the country’s debt burden.
Meanwhile, the ZRA says it plans to realize a staggering K8 billion in an amnesty extended to various business houses accrued on interest and penalties.
Launching the amnesty in which defaulters where allowed to resolve their outstanding arrears outrightly, over three or nine months until December this year, Chanda says while there were some administrative lapses during the process, all defaulters would be expected to resolve their indebtedness in the amnesty that runs from 24 April to 31 July this year.
During the period, according to Chanda, tax payers will be expected to submit all outstanding tax returns and pay all their principal tax liabilities for tax periods prior to 1 March, 2017 and that all waivers of interest and penalties shall be on the basis of one submitting outstanding returns and full payment of principal tax liabilities.
However, taking cognissance that most companies could have defaulted on payments because of the difficult business environment that prevailed during last year, warned that the amnesty will not apply to cases under litigation, investigation, interest and penalties arising from an audit or investigation, interest and penalties relating to property transfer tax, among other such cases.
All those not falling under such jurisdictions needed to heed the advice and the amnesty extended like was the case with motor vehicles last year.
On reported smuggling by some unscrupulous business persons, ZRA said the agency has impounded seven trucks laden with smuggled goods in the past two weeks and businesses in the habit of smuggling risked forfeiting their goods including the vehicles used in smuggling to the state under the revised regulations to curb the vice which Chanda said had become rampant.
NOTE: The current exchange rate stands at K9.46/US$1.