‘Illicit financial outflows can aid Covid-19 recovery’

BUUMBA CHIMBULU writes MINING businesses should refund some of the gains enjoyed from illicit financial outflows, tax structures and transfer pricing to contribute to the post Covid-19 economic recovery. This should be an offer by the Chamber of Mines to the parent companies of mining businesses, says a consultant, Wala Chabala. Dr Chabala said this measure alone would ensure that several billions of dollars were returned and retained in Zambia and go a long way to mitigating some of the adverse impact of Covid-19 on the economy. He said this in his paper dubbed “It’s a Love-Hate Relationship Between Government and The Mines.” He was responding to a policy brief for a post-Covid-19 on the Zambian economy launched by the Zambia Chamber of Mines dubbed “A Road to Recovery.” Dr Chabala said the Chamber would cement its relationship with Government by bringing to the table one or two owners of mining companies to commit to paying back a few billions of dollars to go towards the costs of mitigating the impact of Covid-19. He said this measure would commit to start 2021 on a new footing of no illicit outflows, no adverse tax structuring, mis-invoicing and transfer pricing. Undoubtedly, Dr Chabala explained, that would go a long way to turning around the fortunes of the Zambian economy post-Covid-19. “Given the adverse impact of Covid-19 on economies, with Zambia projected to have its GDP grow -5.1 percent in 2019, it would have been a greatly welcome gesture if the Chamber of Mines were to bring an offer from the parent companies of the mining businesses to refund some of the gains they have enjoyed from illicit financial outflows, tax structures, transfer pricing, etc.,” he said. Dr Chabala encouraged the Chamber to put in its policy prescriptions for its members to embrace more environmentally and socially beneficial business practices such as impact investing and shared value strategies. Such practices, he said, if implemented would potentially ensure that the mining businesses avoided engaging in some of the dark sides of their trade, as well as promoting value-addition to the minerals in the country. Dr Chabala explained that the major reason Government turned to increasing mineral royalty as a means of taxing the industry was because the mines resorted to complex tax structures to avoid paying taxes on profits in the country. “And when the mining sector appears to mock the government that it is because it is poor at tax administration that it chose to burden the sector with simple mineral royalty tax, this cannot promise well. “The government must passionately hate it that some of the mining companies would resort to mis-reporting the assays of the minerals they are due to export out of the country to try to minimise the mineral royalty tax that would fall due to the government,” Dr Chabala said. The Sun