The Zambia Revenue Authority – ZRA has opted to remain mute on allegations that government is paying out excessive tax refunds and dedicating excessive resources to dismantling the controversial VAT refunds to the mining companies resulting in the current liquidity (no money in circulation) challenges being experienced across the country.
Efforts by the Zambian Business Times – ZBT to get official responses on the allegations from ZRA on the VAT and other tax refunds that have been paid out for the first quarter of 2022 as well as the net tax revenue position from the mining sector have proved futile.
Zambia’s Copper mining sector represents over 70% of the country’s total export, copper is currently trading around US$9,600 per ton, a price point considered to be among the best times and yet that country does not seem to be getting the much needed trickle down effect.
Most business leaders have indicated that their companies are facing low demand for goods, depressed sells and a general atmosphere of low spending power and low liquidity (no money in circulation) challenges. The upward fuel price adjustments have exacerbated the cost of living in Zambia further dampening consumer demand.
The Zambia Revenue Authority (ZRA) had earlier reported that it recorded an increase in mining company tax collections for the period January to April 2022 compared to the same period in 2021. But their report was short of stating the net tax positions, as allegations are that ZRA is picking up reduced net tax positions after paying out VAT and other forms of tax refunds.
There are growing allegations that ZRA is paying out more to mines in form of tax refunds compared to how much the agency is making from tax collections, the net position is alleged to be deteriorating, which is shocking at a time when there are better international copper prices.
Economist Yusuf Dodia told the Zambian Business Times – ZBT that government is struggling to pay off Value Added Tax (VAT) refunds to mining companies as it has a huge debt to the mining firms where VAT refunds are concerned. There has been no public audit conducted to verify the outstanding VAT refunds debt.
Zambia had in 2020 paid K8.5 billion in value added tax refunds to mining companies and according to the Zambia Revenue Authority, government was owing K7.1 billion in VAT refunds to mining companies as of January 2021.
The government economic management team at the Ministry of Finance and Bank of Zambia have all indicated that getting an IMF deal remains the one and only viable way out, but countries like Ghana that had gotten on similar program continued to experience harsh economic conditions for the majority of their population to an extent were they abandoned the IMF program before it ended.
Further efforts to get a comment from ZRA on how much the authority has paid out to mining companies in terms of VAT refunds proved futile as press queries sent to the authority’s Acting Corporate Communications Manager Oliver Nzala proved futile by press time.
