Another Chinese multinational company failed to pay tax in Zambia on $150m contract

China Civil Engineering Construction Corporation (CCECC) which was offered a $150 million contract to develop water supply system in Lusaka did not pay any tax to the Zambian government, Zambia Revenue Authority (ZRA) sources have revealed.

Just last week, the Zambian Watchdog revealed that China ZTE’s Corporation which was offered a $93 million contract by Zambia Electricity Supply Corporation Limited (ZESCO) to deploy fiber-optic lines country wide did not pay  any tax to the Zambian government. See here 
The contract for water supply system was signed in 2011 and was completed in 2014. The US$150 million was borrowed from Exim Bank of China and was meant for the development of the Kafue bulk water supply project and improvement of water supply to both residential and commercial areas in the capital city of Lusaka. Even though the project was completed water supply in Lusaka is still pathetic but CCEEC was paid in full.

About this same time, the American government through the Millennium Challenge Corporation (MCC) funded the development of Lusaka water supply, sanitation and drainage programme at an estimated cost of K1.8tn.

CCEEC is china’s large-scale state-owned enterprises and is listed among the world’s top 250 international contractors for seventeen consecutive years by the Engineering News Record (ENR).
Sources close to the case said that it’s a shame that CCECC after being paid failed to pay the taxes to Zambia Revenue Authority (ZRA).

‘And the amount of unpaid tax by CCECC is a very huge proportion compared with country’s annual budget, said a government source.

In 2013, CCECC signed another Memorandum of Understanding relating to the off-grid power plant solution with the Rural Electrification Authority (REA). The amount is also about $150 million dollars.
‘It is very strange how the CCECC which is a civil construction company was allowed to participate in energy project and it is not clear how CCECC can be allowed to get such big projects without obtaining a tax clearance from ZRA which is a key precondition to participate in any government project.’ said a government source.

Currently, the same China Civil Engineering Construction Corporation (CCECC) is in the process of signing agreements with the Zambian for the construction of a rail line at a total cost of $2.7 billion.

The details of this agreement are as usual shrouded in secrecy.

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