ZAMBIA LOSES $3BN IN TAX EVASION

ZAMBIA is losing in excess of $3 billion a year to tax avoidance and tax evasion by multinational companies, the War on Want report on extracting minerals and extracting wealth in Zambia has revealed.

And the Zambia Revenue Authority has warned that perpetrators would be seriously prosecuted once found wanting because tax evasion was a serious crime.

The report indicates that some mines were not declaring accurate sales prices for their copper production.

“Many copper mines are not paying corporate income tax because they are declaring no profits despite producing larger amounts of copper,” the report states.

It indicates that Zambia was every year losing around $2 billion in corporate tax avoidance, $264 million in tax evasion and an unspecified amount in tax incentives.

“In the five years 2007 to 2011, for example, a named Copper Mine’s annual reports suggest that it produced $4.3 billion worth of copper. Using copper prices given by the US Geological Survey, however, this production would have been worth $6.8 billion, there is a difference of $2.5 billion,” the read states. The report explains that the discrepancy may be accounted for by the mine’s third party tolling such as supplying other parties with its copper production, meaning that its own sales figures are reduced.

The extractive report stated that overly generous tax incentives provided to companies by the government have also played a role.

“That is why the attempts by the Zambian government to reform their tax system have met opposition from powerful mining companies and international organizations supported by Northern countries where the multinationals concerned are based,” the report states.

The report recommends further investigation by Zambian authorities, given the possibility of mining companies’ under-reporting sales in order to reduce their taxable income.

Meanwhile, ZRA Cooperate Communications Manager, Topsy Sikalinda, told the Daily Nation that the authority had noted with concern that many people were dodging paying tax. Mr Sikalinda said that Government was losing huge sums of money meant for development.

"This is a serious crime and we cannot tolerate. The authority will not hesitate to ensure that the law visits crooked people who are in such habits," he said.

He encouraged members of the public to report people that were evading tax payment so that they could prosecuted. Mr Sikalinda however stated that ZRA had lined up a number of measures to reduce smuggling of goods at the borders.

Mr Sikalinda said that ZRA had intensified tax education and the penalty charges but only on seized goods and vessels. He added that ZRA had procured scanners to check the trucks so as to be sure about the type of cargo they were laden with.