THE Zambia Revenue Authority (ZRA) must refund the over US$600 million Value Added Tax (VAT) owed to the mines otherwise the consequences of not doing so would be too grave to contemplate.
What Zambians and other stakeholders should understand, from the onset, is that VAT refund is legal as the law provides for this undertaking by the ZRA using VAT Rule 18 which came into effect in 1997.
When the law was put in place, its intention was aimed at safeguarding Government revenue as business entities exported their goods.
There are steps however to follow before an exporter can claim VAT refunds which have changed.
Initially, all a taxable supplier required to claim VAT refund was simply provide copies of export documents for the goods, bearing a certificate of shipment provided by ZRA and tax invoices from the country of destination.
But few years ago, VAT Rule 18 was amended to compel exporters to show proof of receipt of payment for the goods so exported.
This is what has brought about the problems that have resulted in more than US$600 million which the ZRA is refusing to refund some mines.
The ZRA has stated that refunds withheld on account of non-compliance with the existing Rule 18 can only be made when the legal documentations have been provided.
In the midst of all the legal jargon and debate, there seem to be an element of overlooking the consequences of the mines lacking liquidity.
Already, members of the Chamber of Mines of Zambia have announced the suspension of various projects because of lack of financial resources particularly because of the withheld VAT.
On Tuesday, Mopani Copper Mine announced a possible retrenchment of 20,000 workers because the mines were experiencing financial problems.
Mopani Mine is owed U$200m in withheld VAT refunds.
Mopani Copper Mines is only one of the mines in Zambia which collectively employ 75,000 direct and indirect workers.
Therefore, Government cannot allow the mining sector to collapse because of legal encumbrances which can be resolved.
If the mines collapsed, it is not only the investors who would lose out but Zambians who include workers, their families, the suppliers and their workers.
In short, it would be economically and socially catastrophic to have an investment such as KCM to fold up on account of a legal impendiments.
Government should have reflected on the state of affairs of ZCCM before a decision was made to privatise mining entities.
It is in the interest of Zambians, especially Government, to ensure that the sector which is the backbone of their economy is safeguarded.
This should be the prime interest of all talking about whether the mines should be refunded VAT or not.
The impediments being encountered in the administration of ZRA VAT Rule 18 were enacted by Zambians who have a national responsibility to act in the interest of majority Zambians who largely depend on the proceeds from the mines.
Our view is that a way must be found to ensure that the withheld US$600 million in VAT refunds is unblocked to put life in the mines.