CURB ILLICIT FINANCIAL FLOWS, SAYS TAX EXPERT

THE Zambia Tax Platform (ZTP) has called for the introduction of measures which will extensively deal with illicit financial flows and to hold multinational enterprises financially accountable.

Law enforcement agencies should deal decisively with individuals perpetrating suvh crimes especially at a time when Zambia needed resources for developmental programmes and also for mitigating debt crisis and fight the Covid-19 Pandemic.

This is according to ZTP Coordinator, Ibrahim Kamara.

Mr Kamara urged law enforcement agencies to investigate the findings of the Financial Intelligence Centre

(FIC) in relation to financial crimes perpetrated in 2019.

The FIC published the Trends

Report of 2020 (the “Trends Report”) which covers the 2019 financial year.

The report findings and revelation are not only aimed at educating the public on measures to detect, prevent and deter financial crime but also to provide basis and grounds for public prosecution of the crimes.

According to the report, the proceeds of crime from tax evasion rose from K195 million in 2018 to K450 million in 2019 with mining multi-nationals accounting for a significant portion.

Arising from this,, Mr Kamara called for stronger political will in the fight against financial crimes especially as highlighted in the FIC trends report.

“Failure by authorities to act on the findings from the recent

FIC report will result in the report becoming a mere academic exercise,” he said.

Mr Kamara regretted that corruption also remained a perennial issue with those charged with authority being the main culprits.

He said public procurement was found to be the primary source of syphoning public funds.

This, he explained, was concerning for a number of reasons.

“Firstly, it impacts negatively on allocation and distribution of domestic resources and secondly raises questions of accountability in the management of public funds and assets, particularly at a time when the country is facing its largest debt deficit in recent times.

“The perception of corruption further creates a negative image and jeopardises inflow of funding from cooperating partners,” Mr Kamara said.

Mr Kamara said the Trends Report revealed that tax evasion and avoidance among multinational companies, particularly those in extractive industries robbed Zambia of much needed resources for development as profits are largely externalised.

In May, 2020 the Supreme Court of Zambia ordered Mopani Copper Mining Plc (Mopani) to pay the Zambia Revenue Authority (ZRA) an additional tax of K240 million (approximately US$ 11,5 million).

The dispute between the ZRA and Mopani arose over pricing of copper that the mining corporation sold to its parent company Glencore International AG based in Switzerland and was one of the largest transfer pricing cases that the ZRA has dealt with.

This case is a landmark victory for the Zambia Revenue Authority and the country at large in that it showcased evidence of tax avoidance through base erosion and profit shifting.