Maravi

(HERALD) Zimplats denies tax evasion

Zimplats denies tax evasion
Friday, 18 November 2011 00:00
Business Reporter

ZIMPLATS has dismissed claims that it owes the Government US$265 million in taxes and penalties not honoured to the State as contained in a report compiled by international audit experts Alex Stewart.

According to the auditors' report on Zimplats, the unpaid monies are comprised of US$70 million in unpaid additional tax profit, US$70 million penalty for late payment of tax and US$125 million interest for late payment.

In their report submitted to the Reserve Bank in 2008, Alex Stewart International concluded Zimplats had neither computed nor paid additional tax profits between 2001 and 2007, as required in terms of the Income Tax Act.

ASI had undertaken the mineral export audit at the instigation of the central bank, in terms of Statutory Instrument 249 of 2006, on suspicion a number of mining firms had not honoured their tax obligations to the State.

It was feared that during the period investigated, the country could have been prejudiced by mining firms of more than US$400 million in unpaid taxes.

But the country's biggest platinum mining firm denies any delinquency in paying its dues to the State, rather it claims ASI's conclusions are riddled with errors.

"ASI computations were erroneous and, as a result, grossly overstated the amount that Zimplats was liable for. The correct amount was assessed and paid by Zimplats to the relevant arm of Government," said Zimplats.

Zimplats claimed ASI's initial computation showed a liability of US$70 million, but insists the errors in the computations inflated the amounts due.

"Apart from more fundamental errors on the interpretation of the provisions of the Income Tax Act, the computation has basic arithmetic and duplication errors, which have the effect of inflating the amount due."

The platinum mining giant added that a correction of "just three" of the errors reduced the liability, as per computations done by ASI, by US$30 million.

But a computation by tax experts engaged by Zimplats concluded the firm owed just over US$23,4 million and that this obligation had been fully paid.

The 87 percent owned unit of South Africa's Impala Platinum Holdings said the fact ASI were an international firm did not mean they were infallible or that their report alleging non-payment of taxes cannot be challenged.

Zimplats said "ASI computations were strewn with errors (arithmetic, duplication and misrepresentation of the Act)," resulting in overstatement of principal liability and that use of a 340 percent interest rate on US dollar liability was "incorrect and therefore the interest was overstated".

The errors were brought to the attention of both the RBZ and ASI, but the latter would not "unfortunately" act to correct them.

During a recent presentation before the Parliamentary Portfolio Committee on Budget and Finance, Reserve Bank of Zimbabwe Governor Dr Gideon Gono indicated there was no political will to take ASI's findings to a court of law for purposes of recovering the monies.

ASI has since taken the central bank to court claiming US$35 million, plus interest, for work they did but were not paid. The agreement had been that they would be paid a commission on the recovered taxes.

Labels: GIDEON GONO, IMPALA PLATINUM, MINING, PLATINUM, TAX EVASION, TAXATION, ZIMPLATS

posted by MrK @ 3:11 AM