The Zambia Revenue Authority (ZRA) says it has uncovered a scam in which one of the mining giants in the country has been importing machinery and spare parts without paying customs duty for the past five years.

And an inside source at the mining company has revealed to News Diggers! that the firm in question is Solwezi based Kalumbila Mine and that ZRA auditors are still on the ground investigating the case.

In a statement issued yesterday, ZRA Corporate Communications Manager Topsy Sikalinda explained that ZRA had started auditing mining companies for compliance in all applicable tax types.

“ZRA has started the process of comprehensively auditing mining companies in all applicable tax types. Last year, the amnesty on interest and penalties was announced to allow taxpayers to clean up their tax accounts. Those with issues were expected to engage ZRA and have a waiver on interest and penalties. A post amnesty review shows that only small and medium companies stepped forward and the Authority raised about K4.4 billion from the programme. Unfortunately, most large companies did not participate despite numerous reminders and extensions,” he stated.

“The planned audits will cover the statutory period of 6 years to start with. However, if the findings will review a pattern of consistent, systematic, premeditated cheating (tax evasion), we shall criminalise the act and cover longer periods to achieve the intended objective.

Sikalinda revealed that ZRA had uncovered a scam in which a prominent mining company had been importing spare parts without paying customs duty.

“For this reason we are announcing the preliminary assessment of K76.5 billion (USD 7.7 billion) issued to a prominent mining company for misclassifying consumables and spare parts at importation for the last five years. The said items were declared as mining machinery – which attract customs duty at zero per cent – when in fact not. The applicable duty rate for the items ranges from 15 to 25 percent,” he stated.

“The Authority is currently ascertaining the involvement of the clearing agent who, if found to have been actively involved, will face appropriate sanctions that may include complete revocation of the trading licence. We have since notified both the mining company and the clearing agent of this unacceptable act of cheating. We are taking this case very seriously and we shall pursue all available options to recover all taxes on behalf of the Zambian people.”

Sikalinda announced that the audit of all mining firms in Zambia would commence on March 26.

“We also wish to announce that starting 26th March 2018, our investigation teams and auditors will commence the audit of all mining firms in Zambia. We are, therefore, appealing to all other companies and players in the Mining Sector that may have been involved in illicit tax activities to make self-disclosure before we discover them. This will help them minimise their exposure to penalties and interests. To those that are evading tax or contemplating doing dubious activities, our warning to them is to stop immediately and start complying. The Authority will definitely catch up with them and take all measures to collect taxes, penalties and interest due,” stated Sikalinda.

And sources at Kalumbila explained that the ZRA auditors were also investigating the involvement of Ballore Africa Logistics in the matter.

“They are here and this has sent panic on management because apparently it seems the clearing agent, Ballore Africa Logistics was involved. The paperwork is not tying up because what they found is that most of the imported consumables were zero rated on tax, but ZRA claims the items like spare parts were supposed to attract up to 25 per cent. Now for the past about five years, this has been happening. That is why this figure is so high,” said the sources.

Kalumbila Minerals Limited, also known as Sentinel copper mine is located approximately 150km west of Solwezi in north-west Province. The mine is a subsidiary of First Quantum Minerals (FQM) and one of the biggest mining giants in the country.