Centre for Trade Policy and Development executive director Isaac Mwaipopo says investigations into the K76.5 billion tax scam by Kalumbila Copper Mines must not be jeopardized by political interference.

In an interview, Mwaipopo commended the Zambia Revenue Authority for exposing the scam, noting that the tax burden would change if government collected all the tax due to government from the extractive sector.

“We note that despite government putting in place measures such as setting up the Transfer Pricing Unit, Mineral Value Chain Project and Mineral Production Support Project and the Extractive Industry Transparency Initiative-EITI, it is becoming more evident that revenues collected by government are not a true reflection of the country full potential to
mobilize resource locally. We have equally observed with growing concern the rising tax burden for general citizens and we think this can change if big players come on board and paid their fair share of taxes, especially the mining companies. The recent scam from the revenue authority clearly shows that there is a lot that is happening under the carpet which, if addressed can help improve the revenue basket for this country. As the investigations continue, CTPD expects that maximum support will be given to ZRA so as to enable it to fully finish the undertaking. It is also our expectations that the investigation process will not be jeopardized by any political interference as was the case with ZCCM and Konkola Copper Mines for claims relating to outstanding payments under a copper price participation agreement between the two entities,” Mwaipopo said.

“From the information shared with the public on the scam, it would be important to also investigate if at all there were any customs officials that helped facilitate these transactions. Should there be any, they need to be brought to book as well.”

Mwaipopo welcomed ZRA’s intention to conduct a forensic audit of mining companies.

“We would like to commend the Zambia Revenue Authority (ZRA) on the job well done in exposing the tax evasion scam worth 76.5 billion kwacha within the extractive sector and CTPD welcomes intentions by the authority to undertake an extensive audit of mining companies. Tax Evasion often entails taxpayers deliberately misrepresenting the true state of their obligation to the tax authorities in order to reduce their tax liability and it often includes dishonest tax reporting, such as declaring less income, profits or gains than the amounts actually, earned or even overstating deductions,” said Mwaipopo.

“Zambia is a country rich in mineral wealth, but we note that this wealth has not translated into meaningful social and economic development for its people. Poverty, Inequality and debt still remain very high and therefore expectations around Domestic Revenue Mobilization remain unquestionably top priority for a struggling country like Zambia. While there may be some challenges in the collection of taxes and tax compliance, especially in the informal sector, it is important that every person and sector pays a fair share of tax, and the mining sector is not an exception.”