Zambia corners mining companies to stop tax evasion
Africa’s biggest copper producer Zambia is planning to repatriate foreign currency made from exports back to the country in an effort to crack down on tax evasion, mainly in the mining sector, reports Financial Times.
The ruling, which may come into force in a couple of weeks, would apply to all exports and imports over $10,000, Zambia’s deputy finance minister, Miles Sampa, told the FT.
Companies would have 60 days to deposit funds in a commercial bank in the southern African country and they would be forced to provide banks with evidence that supports reasons for transferring funds offshore, such as dividend payments, or to import equipment.
The country doubled its mining taxes in 2011 to 6%, claiming that Zambia was not getting enough benefits from its mineral wealth.
Contrary to what analysts predicted, the measure did not scared away mining companies such as Glencore International (LON:GLEN), Vale (NYSE:VALE), First Quantum Minerals (TSX:FM) and Vedanta Resources (LON:VED), all of which have copper projects in the country worth billions of dollars.
The nation is also said to be in the process of amending its mining code to enable the government to raise taxes again and implement a 35% minimum ownership threshold for state shareholding in projects.
Zambia’s copper output is expected to reach up to 1.5 million metric tons by 2016, from around 800,000 tons produced in 2012.
(Image by The Library of Congress)