Zambia amended rules that prevented companies from First Quantum Minerals Ltd. (FM) toVedanta Resources Plc (VED) claiming refunds on value-added tax payments as the revenue authority and finance minister differ on the matter.
A rule requiring exporters to supply import documents from the country of destination to get refunds will be removed from Sept. 8, the Zambia Revenue Authority said in an e-mailed statement today. To claim refunds before that date, companies must provide the papers, according to the authority, which said it has withheld repayments totaling 3.6 billion kwacha ($595 million) as of July 31.
In a July 15 letter to President Michael Sata, Finance Minister Alexander Chikwanda said the government should negotiate staggered repayments with mining companies after introducing a more prompt refunds regime. The dispute pushed mines in Africa’s second-biggest copper producer to stall or slow as much as $1.5 billion of investments, according to the Chamber of Mines of Zambia.
There is no dispute that the VAT is refundable and the only question is what should be considered sufficient evidence that the exports took place, Felix Nkulukusa, permanent secretary in the Ministry of Finance, said in an interview before the ZRA announcement.
The amendments to the tax regulations are received with “a lot of relief,” Jackson Sikamo, president of the chamber, said in an e-mailed response to questions today.
Outstanding refunds should be paid within a year, according to a June 27 report by Robert Conrad, professor at Duke University in North Carolina, and Martin Lokanc, a mining specialist at the World Bank in Washington.
To contact the reporter on this story: Matthew Hill in Lusaka at [email protected]
To contact the editors responsible for this story: Antony Sguazzin at [email protected]Dylan Griffiths, Ana Monteiro, Vernon Wessels