Zambia plans to waive a rule requiring mining companies and other exporters to produce import certificates from destination countries because it is impracticable, finance minister Alexander Chikwanda said on Tuesday.
Chikwanda said the ministry planned to negotiate a staggered repayment of the $600 million in VAT it has withheld from copper mining companies because of failure to produce the import certificates.
The government of Africa’s second largest copper producer last year started enforcing a 2008 requirement that exporters provide it with the certificates for copper shipments in order to curb tax avoidance.
However, the companies complained that they were often unable to do so because they sold via middle men.
Chikwanda said he wrote to President Michael Sata asking that the VAT rule be limited to export verification.
“The rule creates uncertainty and undermines confidence in the economy,” Chikwanda said in the letter dated July 15.
The companies affected include the local units of First Quantum Minerals, Vedanta.