Government appears to have completely U-turned on the $600m VAT refund to exporters, with the larger bulk owed to mines and other exporters. ZRA says the U-turn is due to widespread concern on the matter. Minister Minister Chris Yaluma says ZRA will do what they think is right and like they said, they have got the autonomy to run as best as they can to ensure all needed revenues are collected...They are trying to do what they can do best in the interest of the country.” (Source: The Post). No word from Alexander Chikwanda but it appears the U turn has President Satas backing. Mopani Copper Mines revealed last week that it is owed about $200 million in VAT refunds by GRZ because it has failed to comply with a rule requiring them to supply import documents from the country their exports end up in. It says it can’t provide the papers because it sells to traders and don’t know the final destination of the metal (Source: Bloomberg) There are fears that the ongoing stand off will lead stalling of investment in the medium to long term, possible job losses. Mopani, a unit of Glencore, the world’s third-largest miner by market value, is undertaking a $323 million investment at its Nkana mine near the Zambian city of Kitwe. The unit currently employs over 20,000 employees in Zambia. The Chamber of Mines has said that non-payment of the withheld VAT refunds have had and continue to have a major adverse impact on the operations of the mining companies. In a statement last week it said, the cash flows have been seriously constrained following the withholding of the refunds resulting in many mining companies suspending, deferring, and cancelling capital projects among other undesirable actions to keep operations going..The effects of these actions are already being felt in the medium to long term, there will be a negative impact on mine production, production costs, suppliers of goods and services to the mining industry” (Source: Daily Nation). Mining companies have a long list of policy measures they would like Government to remove. These include : the export duty on semi-processed copper products;import duty on various copper products: Rule 18 of the Value Added Tax Act under Commissioner General’s Rules requiring proof of export for VAT zero-rating purposes; capital allowances for mining investment; and road tolling charges on inter-mine transportation of products for processing. The Fitch Rating recently gave a positive outlook for Zambias economy largely off the back of what it regarded as a positive steps GRZ has been taking in addressing mining regulatory issues, include the decision to remove VAT rule. There is also the ongoing negotiations with the IMF for a bailout programme. The IMF have previously called for the VAT refunds. It is not clear how much the IMF will tie its negotiations to mining regulatory reform. But it does seem that Fitch may have jumped the gun somewhat. It is unlikely the Budget 2015 will move us further on clarifying the way forward.
Posted on: Sun, 28 Sep 2014 08:08:33 +0000
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