Govt defends Mopani on tax
By Kombe Chimpinde
Tue 17 May 2011, 15:40
GOVERNMENT has defended Mopani Copper Mines on reports of tax avoidance.
In February this year, a leaked audit report revealed glaring irregularities in the production and revenue figures that Mopani Copper Mines (MCM) submits to Zambia Revenue Authority (ZRA) for tax administration.
The auditors complained that the mine was uncooperative and all audit queries were unanswered.
However, MCM described the report as incomplete and erroneous.
Mines minister Maxwell Mwale said Mopani Copper Mine’s discrepancies in tax payment could be attributed to slight delays in its settling of taxes for other financial years.
“Whenever an auditor raises issues of concern, they will write to owners of the firm to explain wherever those issues of concern are arising from after they have been explanations made, because you may not know if for instance a payment delayed from the last financial years,” said Mwale when he featured on Muvi TV’s Assignment Programme on Sunday.
“Even the Auditor General, when she is carrying out an audit, will explain to the ministries any discrepancies arising and only after the ministry has explained the discrepancies is action taken.”
He maintained that big mining companies were paying relevant taxes.
“Mopani has been paying tax to government. First Quantum has been paying taxes to government. KCM Konkola Copper Mines has been paying tax to the national treasury according to the current tax system in place,” Mwale said.
“For publicly listed companies, corporate governance is vital for their integrity. You can never run away from issues of governance.”
Mwale said although ZRA had a challenge in auditing mining firms, it would not let companies evade tax.
“If they were underpaying ZRA, ZRA will issue notices that, ‘Mopani should pay’,” said Mwale.
Minister Mwale further expressed surprise at the manner in which non-governmental organisations “jumped on the bandwagon” to criticise Mopani mines based on an uncomplete audit report.
“The way it’s been put, it’s like an auditor just dropped from out of space to audit Mopani and not realising that this is a government programme,” said Mwale.
“I would like to inform you that as early as 2007 when the current President was vice-president, Alex Steward (an auditing firm) was being talked to to see if they could audit our mining industry. By then the Norwegian government auditors also offered to audit our mines. It’s not that an auditor just came out of space and imposed himself on us.”
Norwegian government officials auditors are currently in the country to audit the mines in collaboration with the Office of the Auditor General.
On the 2007-2008 Extractive Industry Transparency Initiative (EITI), which highlighted that Zambia lost K12 billion in uncollected taxes, Mwale said discrepancies did not necessarily mean that monies were lost.
“Some of these arise from differences in the accounting for different financial years. We have to be careful with the EITI report,” said Mwale. “If truly Mopani and other mines have not been paying tax, that’s why we have our own institution ZRA and I appeal to you to have confidence in our own institutions. When you talk about loopholes in ZRA, those are issues of capacity building. If you identify a problem you look out for a solution.”