Zimplats hit with $34m tax receipt

2012-10-06 13:25

Impala Platinum’s Zimbabwean subsidiary, Zimplats, has been slapped with a tax bill of almost $34 million (R294.8 million) by the Zimbabwe Revenue Authority (Zimra).

The country’s taxman is turning up the heat on mines in a push to prevent slippages in revenue.

The tax bill is backdated to tax claims the platinum giant owed since 2007. Zimplats chief executive Alex Mhembere has since indicated the company would not contest the figure.

The bill is a revision from the $28 million claim Zimra had initially filed against Zimplats ­earlier in the year.

The company’s chief financial officer, Patrick Maseva-Shayawabaya, said: “The principal tax per the assessments amounts to $33.8 million and the company may be liable for additional ­interest and penalties.”

Zimplats and Zimra are locked in negotiations to waiver the ­payment of additional interest and penalties.

Zimplats is the largest platinum miner in Zimbabwe, where the second-largest known platinum deposits in the world exist, and operates three underground mines and a concentrator at its Ngezi mine.

Platinum production has ­increased almost tenfold since 2001, from 20 000 ounces to 187 000 ounces currently.

Plans are under way to increase production to 270 000 ounces, which will see employees increase from 3 000 to 5 500.

Observers have slammed ­Zimra for its bullying tactics, which they warned would ­unnerve mining companies still reeling under the 51% ­indigenisation laws.

Eric Bloch, a senior partner at H&E Consultancy, said: “The cash-strapped government is hard-pressed for money and has roped in the tax authority to get money through whatever means necessary. There is a real danger mining companies are becoming the next target and will increasingly become the government’s cash cow.”

Despite Zimra’s offensive, to date, Zimplats had paid ­$23 million in direct taxes to the state.

The mining sector remains volatile, hard-pressed by hikes ­effected this year that have raised alarm about the profitability of a ­recovering industry.

Zimbabwe increased mining royalties to 7% from 4.5% for gold, and to 10% from 5% for platinum.

Zimra’s pursuit has been ­buoyed by Finance Minister Tendai Biti, who last month ­gazetted amendments to Zimra’s legislation, which empowers the tax authority to use previously unlawful means to ensure ­royalties and fees payable to the tax authority are made.

Biti is under pressure to support the economy after diamond companies in Marange failed to meet a $600 million contribution to the budget, which had the effect of knocking the country’s $3.4 billion budget off the rails.

Last month, the International Monetary Fund warned economic growth could fall ­further to 5%, a decline from ­Biti’s projected 5.6%.

In an interview this week, Biti indicated that his hopes rested in ­securing funding from regional neighbours.

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