ZRA raids Kagem, Gemfields’ shares fall

ZRA raids Kagem, Gemfields’ shares fall

(Reuters) – Gemfields’ shares fell more than 4 percent on Friday after it said that Zambia’s Revenue Authority (ZRA) had obtained warrants to search its Kagem emerald mine in an investigation into alleged tax evasion.

In May Zambia hit Canadian miner First Quantum Minerals with a tax bill of more than 76.5 billion Zambian kwacha ($8 billion) after a separate investigation.

In a statement to the Johannesburg Stock Exchange, Gemfields said the Zambian Revenue Authority (ZRA) served two search warrants in an unannounced visit to Kagem Mining. The search warrants were served on Kagem and another company – Limpopo Polygraphs (LPCC) – a South African firm that conducts polygraph testing at Kagem.

Documents and files described as “wide-ranging” by Gemfields were seized, including those allegedly “… used by Kagem Mine Ltd/Limpopo Polygraphs CC to evade the payment of value added tax, income tax, with-holding tax and other taxes”.

 

Gemfields estimated that the aggregate value of all work conducted to date by LPCC for Kagem was less than $7.5m. “Gemfields will provide further updates as pertinent information becomes available,” it said in the statement.

The development is part of a wider attempt by the Zambian government, echoed elsewhere in sub-Saharan Africa, to improve tax collection from mining companies operating in its border. First Quantum Minerals said on July 31 that it had provided documents to the ZRA following an $8bn tax assessment in March based on “… import duties, penalties, and interest on consumables and spare parts” dating back to 2013.

 

Share this post