Loading ...Zambia has finally yielded to pressure, easing tax regulations that have deprived mining companies operating in the country from refunds estimated at more than $600 million.
The new rules, effective Monday, will allow exporters to provide import documents from transit countries instead of forcing them to only document the final destination — something companies claim is almost impossible, Reuters reports.
The decree only applies to future payments and not amounts already owed, with the revenue authority planning to start talks over the backlog “on a company-by-company basis.”
Africa’s second-largest copper producer has been withholding value-added tax payments from miners and other exporters. Authorities argue they were needed to curb tax avoidance, but the move mostly caused mine closures and thousands of job losses.
One of the first companies to act on it was gold giant Barrick (TSX:ABX), which announced it would suspend operations at its Lumwana copper mine, and would start laying off workers in March putting close to 4,000 jobs at risk.
Fellow Canadian miner First Quantum Mineral (TSX:FM), Zambia’s largest foreign investor, warned that the new tax system would “inevitably” lead to fewer new jobs and dissuade entrepreneurs from investing in the country. Earlier in the year, the company delayed investment projects worth $1.5 billion in Zambia due to uncertainty over the fiscal regime.
Glencore (LON:GLEN), the world’s third-largest miner by market value, also did its part by halting operations at its Sable Zinc Kabwe mine.
Zambia eases tax rules, to start refund talks on a ‘company-by-company basis’