Zambia says First Quantum to pay $224m in back taxesPublished by MAC on 2011-07-11
Source: Reuters (2011-06-29)
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Zambia says First Quantum to pay $224m in back taxes
29 June 2011
LUSAKA - First Quantum Minerals has agreed to pay Zambia $224-million in tax arrears by Friday, Finance Minister Situmbeko Musokotwane said on Wednesday.
The payment was for tax arrears the company incurred after mining companies disputed the government's decision in 2008 to raise taxes against long-term development agreements, whose scrapping they finally accepted last year, he said.
"We are expecting $224-million from First Quantum Minerals and I think we should be getting it today or tomorrow," he told journalists.
The company has also been singled out along with Konkola Copper Mines (KCM), owned by London-listed Vedanta Resources and Glencore's local unit Mopani, for tax issues related to audits.
The companies are keen to have such outstanding issues resolved. The European Investment Bank for example has frozen new loans to commodities trader Glencore over governance issues including its Zambian operations.
According to the World Bank, copper is responsible for 70% to 75% of export earnings but the mining industry as a whole only contributes about 10% of Zambia's tax revenue.
The government has made tax compliance from the miners a top priority as Africa's biggest copper producer is also one of the world's poorest countries.