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Government claims $309 billion from miner

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Government has written US-based Columbia Gem House demanding $309.6 billion (about K310 trillion) in unpaid tax revenue from its subsidiary, Nyala Mines Limited, in respect of ruby and sapphire extracted from Chimwadzulu Mine in Ntcheu.

In his letter of July 26, 2022, Attorney General Thabo Chakaka Nyirenda claims that Nyala Mines Limited duped government into getting registered and licenced after government refused to renew the mining licence for Mineral Exploration PTY Limited which had expired in 2004.

He says the decision was arrived at since government wanted local participation in the mining activities, a departure from the initial arrangement in which the foreign company had 100 percent shareholding.

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The Attorney General asserts that the company underdeclared income generated from the investment which he says breaches Malawi’s mining and minerals legislation.

“Multinational and international investors carrying on business in Malawi owe the state of Malawi fiduciary duties of good faith and the duty to account. Investors are not supposed to engage in conducts that have propensity of harming the economic welfare of the country…and this includes disclosure of all income earned from their investment and to diligently and promptly pay taxes in Malawi,” the letter reads in part.

According to the letter, between August 25, 2008 and July 30, 2013, Nyala Mines exported 150 kilograms of ruby and another rare mineral and 300 kilograms of sapphire every year but only paid K604,413 only in taxes.

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The company declared in the United States of America (USA) minimum price of untreated ruby of $20,000 per carat which yielded in excess of $9 billion and another $15 billion worth of sales for sapphire per year making an equivalent combined total sale of K24.5 trillion a year.

“The total net tax revenue that had been evaded by Nyala Miners Limited amounts to $309,600,000,000.00,” the AG’s letter adds.

Nyirenda says in the letter that Columbia Gem House declared record prices for the Malawi ruby having been set at $425,000 per carat and sapphire at $48.871 per carat while untreated ruby from Malawi is sold between $20,000 and $25,000.

Top grade untreated ruby, according to the AG, sells at $50,000 per carat.

The demand comes at a time the government has undertaken to review double taxation agreements which it says have ripped off the country for many years.

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