Zambia Carrying Out Mining Sector Tax Audit-Minister Of Mine
By Devon Maylie, Of DOW JONES NEWSWIRES 06-02-110856ET
JOHANNESBURG -(Dow Jones)- Zambia's minister of mines said the government is carrying out a mining sector-wide tax audit to ensure that the country is collecting the full amount of taxes necessary for social programs and infrastructure development.
Maxwell Mwale, minister of mines and mineral development for Zambia, told Dow Jones Newswires late Wednesday that the final tax audit reports are being carried out and consultations with companies would begin.
"Taxes are the only thing that allows the government to carry out its social reforms and to build infrastructure," Mwale said.
Mwale said the tax audit was initiated following the 2008 financial crisis which saw some copper projects shut.
Zambia's tax audit came into focus this week after the European Investment Bank said it is investigating tax evasion accusations against commodity trader Glencore International PLC (GLEN.LN) in Zambia, where it is the majority owner of Mopani Copper Mines PLC, and has frozen further funding to the group.
The EIB provided Mopani with a $50 million loan in 2005 to help fund renovation of the Mufulira copper smelter. The loan is due to be fully repaid by the end of 2016.
Glencore denies wrongdoing.
Mwale said it solicited the help of outside consultants to run the tax audit. In April a draft report on Glencore by Grant Thorton, done on behalf of the government, was leaked. The report said Glencore over inflated costs and undervalued its minerals, leading to the possibility it hadn't paid taxes in full.
"That was a preliminary report and further investigations are being done," Mwale said. "We are waiting for the outcome of the report."
-By Devon Maylie, Dow Jones Newswires; +27 (11) 783 7848; devon.maylie@ dowjones.com
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06-02-110856ET
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