KCM must bear costs of unpaid PAYE – Shamenda

GOVERNMENT says the unremitted Pay as You Earn (PAYE) tax to the Zambia Revenue Authority (ZRA) by Konkola Copper Mines (KCM) should be paid by the mining company and should not be deducted from workers’ salaries.
Minister of Labour and Social Security Fackson Shamenda said at a media briefing in Lusaka yesterday that it is not the employees’ responsibility to ensure that correct tax is deducted from their salaries but it is KCM’s duty.
“A tax audit report has confirmed that KCM has underpaid ZRA PAYE from its workers for a number of years and intends to correct this anomaly by effecting deductions from its employees,” Mr Shamenda said.
The minister said KCM management should bear the responsibility and no employee should be adversely affected by management’s incompetence.
He said it is the responsibility and obligation of any company or investor to remit the correct tax to ZRA and urged KCM to do just that.
“My ministry directs that KCM management bears the liability to ZRA to offset the difference in taxes due,” he said.
Mr Shamenda said Government has the duty to ensure that workers are respected and provide a conducive environment for conducting business.
He said the stance taken by KCM to make deductions from employees’ salaries to raise funds to pay ZRA the outstanding PAYE, can create problems that can possibly result in industrial unrest.
Mr Shamenda urged investors to abide by the law and meet their legal obligations.
“Incorrect remittance of tax is a serious offence and this refund should be made to ZRA and management of KCM should bear the costs. Making deductions from employees can bring about industrial unrest,” he said.
Mr Shamenda has since asked KCM management and representatives of the Mine Workers Union of Zambia to discuss and resolve the matter.
On Monday, the Daily Mail revealed that a tax audit established that Konkola Copper Mines (KCM) underpaid Pay As You Earn (PAYE) tax for its workers to the Zambia Revenue Authority (ZRA) due to a payroll system error.
This covers the financial years 2006, 2007, 2010 and 2011.
According to an internal memorandum dated October 17, 2013 obtained by the Daily Mail, KCM vice-president for human capital management David Kaunda said the Vedanta Resources Plc-owned mining company will effect deductions from affected employees who were in employment during the period under review.
“Therefore, effective October 2013, KCM will effect deductions from affected employees who were in employment during the period under review,” Mr Kaunda said.
Earlier this year, KCM asked Government for time to pay back an overdue K136.8 million (US$25.8 million) debt it owes ZRA.
Daily Mail investigations established that the Vedanta-owned company had held “high-level” talks to discuss the unbundling of the debt, according to documentation in possession of the newspaper.
The US$25 million debt was first discovered after a standard routine ZRA probe which commenced in April.