In open conflict with mining operators since it introduced a new tax to replace VAT in July, the Zambian government owes more than $200 million in arrears to mining companies.
When questioned in Parliament on Thursday, October 10, on the issue of the state’s debts, Finance Minister Bwalya Ng’andu explained that as of June 30, the state owed local mining companies Kwacha 2,834 billion ($215 million) in value added tax (VAT) payments. The politician, quoted by Reuters, also specified that the companies concerned were claiming an additional Kwacha 4,955 billion ($375 million) but « without providing adequate evidence ». As a reminder, since December, the Zambian government has frozen all tax refunds due to mining companies1 on the grounds that they also owe it money. « When we calculate what we owe to mining companies compared to what is owed to them, we see that they owe us more, » said Zambia Revenue Authority Commissioner General Kingsley Chanda in January.
1 VAT, previously set at 16%, is refundable for exporting companies.
One thing is certain: this new episode of friction is not likely to calm the already tense relations between the country’s authorities and the major firms in the sector. However, the Minister added that « the government is considering meeting with the mining companies concerned and agreeing on the method of payment of outstanding repayments ». Zambia, the continent’s second largest copper producer after the DRC, derives 70% of its export earnings from red metal.