[By Oliver Chisenga and Darious Kapembwa]
GOVERNMENT on Wednesday invited opposition National Democratic Congress leader Chishimba Kambwili to discuss issues pertaining to the Mopani Copper Mines.
Kambwili, who was in Lusaka at the time mines Richard Musukwa extended the invitation, wasted no time to travel to Kitwe for the meeting held at Garden Court Hotel.
Dr Bwalya Ng’andu (finance minister), Musukwa, Joyce Nonde Simukoko (labour) and Copperbelt minister Japhen Mwakalombe consulted Kambwili before the quartet met Mopani Mine management.
Musukwa thanked Kambwili for attending the meeting noting that the former Roan PF member of parliament and information minister travelled from Lusaka to attend to them.
“When we called he was actually in Lusaka and he said I cannot miss out on an opportunity especially that I pride in the skills and business of Mopani. For us Honourable we are very grateful. I sincerely believe that this is one of the things that you speak with conviction in terms of ensuring that Zambians have an opportunity, the contracts are given to our local people and mostly, and importantly ensuring that the life of the mine at Mopani is not just for the period of three months but to sustain the period beyond three months,” Musukwa said as Dr Ng’andu nodded in agreement.
On Tuesday during a meeting with suppliers and contractors at Garden Court Hotel, Musukwa told the gathering that Kambwili had been invited as a stakeholder to contribute to the discussions to try and find a solution on the Mopani crisis since he has been vocal about it.
Meanwhile, the government says it has been unable to pay VAT refunds to mining companies because most of them have failed to produce proof that copper was exported to destinations as prescribed by the VAT rule 18.
Government owes mining companies millions of dollars in unpaid VAT refunds which has been a contentious issue leading to some companies threatening government with closures.
Mopani Copper Mines for example is owed US $451 million and has cited the debt as one of the reasons it has applied to the director of mines to place the mine under care and maintenance.
According to VAT rule 18, exporting companies must provide documentation from the country where the exports are destined to claim refund failure to which the exported goods would not be zero-rated and therefore such a transaction doesn’t qualify to claim VAT refunds.
Ministry of Finance director – budget Joseph Nonde on Tuesday made the revelations during a meeting with mine suppliers and contractors at Garden Court Hotel.
“…which has been in existence for some time had specific requirements that these mining companies are expected to follow. Particularly if you look at rule 18 which has been an issue for some time it has provisions which indicated which documents mining companies needed to have which were to prove that they were exporting the copper from Zambia,” Nonde said.
He said the government was aware that some of the exported copper that were originally intended for Switzerland, found itself in other places such as China hence failure to produce documentation.
“It wasn’t just the issue of having the copper crossing the borders no, but there was a requirement that they needed to keep specific documentation. One particular documentation that was needed was to keep a record of the country of destination for the products that they were exporting. For example, for Mopani, if they needed to show that the copper had been exported to Switzerland as the case was, they needed to produce documentation that the goods actually went to Switzerland,” he explained. “Now we know the challenges that have been there, most of the products that are coming from here have been exported not there but into China and somewhere else.”
Nonde explained that as long as there was no documentation, it was difficult for revenue enforcement agencies such as the Zambia Revenue Authority to make payments on assumptions that are not backed by law.
“So, this documentation has not been provided and because the documentation has not been provided, and because the documentation was set in the law and it has not been provided, it’s very difficult then for the law enforcers particularly Zambia Revenue Authority, to agree that the law has been complied with and because of that they cannot effect the refunds that are needed and are due to the exporters because the law puts it very clear to say if you don’t have this documentation then we are not going to assume that you should have the relief that is given the exporters,” Nonde said. “In other words we cannot treat your exports at zero VAT tax, it cannot be zero-rated. Instead it has been standard rated, in other words, you should then pay the VAT that was assumed to have been due on those products…so that’s what has been happening. So the documentation has not come from most of these mining companies. They failed to produce the documents to show that their products indeed went to those countries of destinations that they indicated. We have not had the documentation from Switzerland for obvious reasons because some of this copper never went to Switzerland. It went somewhere else, so because of that we cannot process the refunds.”
Nonde said some mining companies have requested the government to do a debt swap where those that owe government in other taxes like Pay As You Earn and other withholding taxes, due to other challenges they faced, with VAT refunds which he said was working well.