The Sunday Mail
Government has mandated an inter-ministerial committee to explore strategies to plug loopholes that have seen Zimbabwe lose millions of dollars in revenue. The committee comprises senior officials from the ministries of Finance and Economic Development and Mines and Mining Development; the Zimbabwe Revenue Authority and the Minerals Marketing Authority of Zimbabwe.
Mines and Mining Development Secretary Professor Francis Gudyanga said the panel would optimise Government earnings from mining in line with amendments to the Mines and Minerals Act, which will be tabled before Parliament soon.
Last year, mining companies earned US$2 billion from exports but remitted just US$50 million to Treasury. An official said Government should get at least US$300 million in such circumstances.
Investigations have shown that some firms were declaring false production and export information, in addition to transfer pricing.
Platinum producers remit 15 percent in royalties, but it is unclear how much ore they export and process in South Africa.
Mining accounts for 65 percent of Zimbabwe’s export earnings. However, only 3 percent of this is banked locally and the remainder goes to offshore accounts.
According to a Global Financial Integrity report on illicit financial flows from Africa, Zimbabwe lost US$12 billion over the last three decades through tax evasion and money laundering.
Analysts have advocated regional and continental groupings to help track such funds through established international instruments.
At a high-level meeting on Tackling Illicit Financial Flows and Inequality in Africa in Nigeria last May, former South Africa president Mr Thabo Mbeki said African countries lose between US$50 billion and US$60 billion annually through illicit financial flows.
In the last 30 years, the continent could have lost more than US$1,4 trillion.
A member of the new inter-ministerial committee, who preferred anonymity, said work was underway to determine the reasons for low mining returns.
“Scrap metal is declared at the ports of exit while gold or any other mineral inside the scrap metal is not declared because Zimra does not have detectors. If royalties and tax are averaging 15 percent, the minimum Treasury could receive from US$2 billion is around US$300 million.
“For instance, all diamonds are marketed through MMCZ which takes its mandatory 0,8 percent and the rest must be transmitted to Treasury. However, it is not coming, so it is either the diamonds are shipped out of the country without the involvement of MMCZ or MMCZ is not remitting to Treasury.”
Government is also setting up a single mining account to better monitor proceeds. In addition, the Finance and Economic Development and Mines and Mining Development ministries are rationalising the mining tax regime to improve revenue inflows.
Finance Minister Patrick Chinamasa told The Sunday Mail a fortnight ago that Government would investigate why the nation was not fully benefiting from its mineral exports.
“If our mineral exports are US$2 billion and what comes to Treasury is US$50 million, we need to find out why. This is something we are taking seriously because we want to find out what is happening to our minerals,” he said.
