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EMERALD SUMMIT 30th 31st JUNE 2013, INTERCONTINENTAL HOTEL LUSAKA, ZAMBIA PRESENTATION BY JOSEPH NONDE
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Outline of Presentation
Introduction Tax administration of the Extractive Industry Mining Tax Unit Major Taxes Under Mining Tax Audit Mineral Royalty & Computation Regulatory frame work Sanctions for Non Compliance Collection Figures, Values and Quantities Captured Way forward & Conclusion
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Introduction
The Zambia Revenue Authority was established on 1st April 1994 as a corporate body with mandate of collecting revenue on behalf of the Government This mandate requires accessing information to determine the appropriate tax due from taxpayers operating in various specialised and general sectors Each sector has own challenges in terms of tax determination [Process complexity (MNE ownership) or sheer poor record keeping (Small & Medium Enterprises)]
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Extractive Industries
Zambia is dependent on its natural resources which includes mainly minerals, of which copper is the mainstay:
Zambias Large scale mining done mostly by Multinational Enterprises (MNEs) through subsidiary operations Increased pressure mounting on Government and the Revenue Agency to collect more taxes from the industry Media coverage and the work of some Civil Society Organisations (CSOs) in the recent past have helped spread perception that Multinational Enterprises (MNEs) in general and Mining Companies in particular not paying fair share of taxes in Zambia How long before the pressure mounts on the Emerald Sector? Political pressure on the issue of MNEs and their operations in the country Will the Gemstone sector escape public scrutiny? Everybody is watching!
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Mineral Royalty
Compensation to the Government for extracting minerals from the earth Charged under the Mines and Minerals Development Act Paid by all holders of mining rights i.e. large scale mining license, small scale mining license, gemstone mining license artisan mining right, large scale gemstone license
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After 2012 the Mineral Royalty rate is 6%. Mineral royalty is payable monthly by the 14th of the month following the sale
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Zambia has TP legislation based on the arms length principle Legislation provides for Tax Information Exchange Agreements (TIEA) and Mutual Assistance in Tax Matters
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Sanctions Applicable
The legal Framework ( Income Tax Act, VAT Act) provides for both civil and criminal sanctions for non compliance with provisions of the Law
Civil sanction to raise a default assessment (Best of Judgement estimation) where no satisfactory records available Failure to keep records, produce within stipulated time or furnish for examination leads to 10,000 penalty units or to imprisonment for
12 months or to both.
Obstruction of an officer is criminal when officers authorised by the Magistrate under Criminal Procedure Code
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79.31215558 0.944601849
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Quantities and Values as Extracted from Customs Period 2010 2011 2012 2013 Y TD W eight (Kg) 2,384.22 235.54 655.47 1,040.06 V alue (USD 174,606.88 5,000.00 222,739.90 356,646.14 V alue (Kr 844,402.21 23,241.12 1,156,195.12 1,934,679.15
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Conclusion
All players must embrace accountability and responsibility and in certain instances transparency All miners and Traders should open up for verification otherwise no persons will back what we do
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