ZANIS COPY-Zambia Sugar denies tax evasion allegations

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Zambia Sugar Company Limited has denied engaging in any form of tax evasion or siphoning of profits offshore as alleged by ActionAid, a global movement working towards achieving greater human rights for all and alleviating poverty.


Zambia Sugar Company Secretary Lovemore Sievu said the company was wholly committed to fulfilling its corporate and social responsibilities adding that it would continue to invest heavily in social spending.


“The fact is that neither Illovo nor Zambia Sugar have ever engaged in anything illegal and it denies categorically any allegation of‘tax evasion’ or ‘siphoning of profits offshore’,” he said.


Mr. Sievu explained that since 2008, Illovo Sugar Limited, which is a mother company of Zambia Sugar, invested KR960 million to double its production capacity in Zambia and created the largest mill in Africa.


“This expansion and related activities provide employment and benefits for more than 5,000 people and their dependants,” he said.


He said as a result of capital allowances on the expansion investment, nearly no corporate tax was payable since the investment was made.


“The availability of these allowances, used by governments all over the world, has nothing to do with tax avoidance. African governments should be as free as any other to attract investors,” Mr. Sievu explained.


Mr. Sievu, who is also in charge of Corporate Affairs of Zambia Sugar, said it was perfectly normal to have low corporate tax during the years of the expansion as allowances are being utilized.

He added that Zambia Sugar will continue to pay corporate tax for generations to come once these capital allowances have been fully utilized.


He however said despite the huge expansion investment which the company undertook, Zambia Sugar paid corporate tax amounting to KR27.3 million between 2006/7 and 2011/12.


“It is important to note that during the five year period 2008 to 2012, Zambia Sugar paid withholding taxes of KR28.7 million and customs and excise duty of KR78 million,” Mr. Sievu added.


He further said employment related taxes increased to KR136 million over the same period from jobs generated as a direct result of the expansion.


Mr. Sievu said in addition, the increased production capacity arising from the expansion of the Nakambala estate has allowed the company to earn additional foreign exchange of US$164 million in 2012 from US$78 million in 2007.


He said with that kind of investment in the expansion project and earnings, Zambia Sugar has been an important contributor to the economic stability of the country.


On allegations that US$47.6 million was paid as management fees since 2007, Mr. Sievu explained that the payments were made to oversee companies largely for commercial reasons and were not driven by tax considerations.


“Payments made by Zambia Sugar for the services of third party contractors, expatriate personnel in Zambia and export services provided by Illovo, are made at a cost. As a result, there is no artificial reduction in profit in Zambia,” he said.


And Mr. Sievu has said Zambia Sugar has complied with all the laws of the land through contributing to the community and small scale farmer schemes.


He noted that the company has spent KR112.7 million in the past six years on education, health, small business development, sports and culture.


“Zambia Sugar operates an estate with 2,900 housing units providing municipal type services such as roads, schools, potable water, electricity and security,” he explained.