The Zambian government is locked into a long-running battle with mining companies operating in the country over their financial practices.

The government claims the companies are evading tax and arranging illicit financial flows (IFFs) and wants to raise taxes on mine operators.

The mining companies deny any malpractice and say that introducing higher taxes would cause miners to lose their jobs and mines would face closure.

Billions lost

In July 2017, the Zambia Financial Intelligence Centre reported that the country was losing an estimated US$3 billion annually through tax evasion and IFFs associated with multinational mining companies.

In response, the Zambian government in its 2019 budget proposed sales tax increases for the mining sector.

Miners rebuffed

The government’s response to companies’ claims that the tax hikes would threaten jobs and affect the economy has been to accuse them of arm-twisting and blackmailing tactics.

President Edgar Lungu, through his spokesman Amos Chanda, maintains that the threats of mass layoffs by miners have no merit.

“The government does not accept that mining companies that fully comply with sales tax in Australia, the US [and] Canada would fail to comply with sales tax in Zambia. The president does not see merit in the opposition to sales tax as things stand,” Chanda said.