Zambia slaps miner First Quantum with US$8 bln tax bill

VANCOUV ER/ LUSAKA: Canadian miner First Quantum Minerals said that Zambia’s tax agency had sent it a letter saying it owed 76.5 billion Zambian kwacha ( US$ 8.04 billion) in import duties, penalties and interest on consumables and spare parts.

First Quantum, which owns two copper mines in Zambia, denied it owed the funds.

“The company unequivocally refutes this assessment which does not appear to have any discernable basis of calculation ...,” First Quantum said in a statement.

The company said it would continue working with the Zambian Revenue Authority ( ZRA) to resolve the issue.

The ZRA said earlier on Tuesday it had uncovered US$ 8 billion tax scam at an unspecified ‘prominent mining company’, nearly double the total amount the country collected in taxes in last year.

First Quantum’s stock dropped 12.4 per cent to C$ 18 on the Toronto Stock Exchange before it was halted. The ZRA statement said it had issued a preliminary tax assessment of 76.5 billion Zambian kwacha to the unnamed company for classifying imported goods as mining machinery, which attract no custom duty.

The import duty on items other than mining machinery ranges from 15 to 25 per cent, ZRA said.

It said the company had been engaged in the conduct for the last five years.

“We have since notified both the mining (company) and the clearing agent of this unacceptable act of cheating,” ZRA said, without naming the company or the clearing agent – a company officially getting goods from one country to another.

ZRA’s assessment suggests the total value of goods imported goods was between US$ 30 billion and US$ 51 billion if about US$ 8 billion is unpaid levy charged at between 15 and 25 per cent.

Almost a year ago, tax chief Kingsley Chanda invited companies and people living in Zambia to declare their hidden assets in tax amnesty. — Reuters