2 January 2013

Zambia: CTPD Calls for Full Mapping, Regulation of Gemstones

THE Centre for Trade Policy and Development (CTPD) has called for full mapping and regulation of the gemstone and small-scale mining in the country to curb tax evasion in the sector.

CTPD executive director Saviour Mwambwa said the only way tax evasion could be lessened would be by carrying out full mapping of minerals in the country saying this would help the Government to have full information on where specific minerals are located.

"There is need for the Government to have clear information on the existence of mineral deposits in the country. That way it will be ease to collect various taxes especially from the gemstone and small-scale miners," Mr Mwambwa said.

In an interview in Lusaka Mr Mwambwa said the Government could raise a lot of revenue if tax avoidance could be lessened by putting various measures in place such as formalising the gemstone and small-scale mining sectors.

He said currently, Zambia was getting 70 per cent revenue from within the country while 30 per cent was coming from co-operating partners and loans from other countries saying if the Government sealed off all the loopholes the budget could be financed 100 per cent locally.

Mr Mwambwa said Government should encourage partnerships between local and foreign investors in the gemstone industry as a way of empowering the local people.

"The other way to reduce profit extenalisation and tax evasion in the mining sector is through partnerships between the local and the foreign investors," he said.

Recently Washington-based group Global Financial Integrity (GFI) reported t

hat more than £5 billion (K40 trillion) has been illegally siphoned out of Zambia over 10 years, with most of it ending up in offshore banks and tax havens.

A report by financial transparency campaigners blamed crime, corruption and tax evasion for the loss of $8.8 billion (£5.4 billion) from the resource-rich country.

Zambia loss of funds between 2000 and 2010 could be traced to trade misinvoicing in which importers pretend to pay more to foreign companies than they actually do.

According to Finance Deputy Minister Miles Sampa the report highlighted what the Government had always been saying with regard to tax avoidance and income leakages in general.

Multinational mining companies are accused of using legal tax avoiding measures to escape $2 billion a year in taxes.

Mr Sampa said only one or two mining operations declare that they are making profits from Zambian copper mines, which hold six per cent of the world's known copper reserves.

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