ZRA Wins Tax Fraud Case Against Spax Mining Limited, Recovers Millions in VAT

The Zambia Revenue Authority (ZRA) has achieved a legal victory against Copperbelt-based Spax Mining Limited, securing a conviction for tax evasion. The company was found guilty of falsifying tax returns and statements, contravening the Value Added Tax (VAT) Act.

According to ZRA Corporate Communications Manager Oliver Nzala, Spax Mining Limited falsely reported receiving taxable goods, such as ores and copper ores, from suppliers Wise Focus Mining Limited and Zamgem International Limited. These fraudulent claims, spanning from January 1, 2022, to August 31, 2023, resulted in a government revenue loss of over K4.4 million.

Mr. Nzala underscored the broader implications of such misconduct, stating, “Submitting false tax declarations undermines the government’s ability to collect vital revenue for public services. This conviction serves as a deterrent to others engaging in similar practices.”

During the pre-trial conference held on November 19, 2024, Spax Mining Limited invoked the Plea Negotiations Act Number 20 of 2010. Through this legal provision, the company agreed to pay the evaded VAT and cover prosecution costs as part of a settlement. The company fulfilled its financial obligations prior to admitting guilt, leading to a conviction by the Economic and Financial Crimes Court, which imposed a fine of K13,500.

The ZRA emphasized that tax evasion not only deprives the government of critical funds but also creates unfair competition in the business environment. To counter these challenges, the authority is intensifying its enforcement efforts by adopting advanced technologies and enhancing monitoring mechanisms to detect fraudulent activities.

Mr. Nzala reaffirmed ZRA’s dedication to combating tax violations, stating, “Our mission is to safeguard public revenue and ensure equitable contributions from all businesses to support the national treasury. Offenders will face the full weight of the law.”

Tax compliance remains a pressing issue in Zambia, especially in the mining sector, which is a cornerstone of the economy. This conviction demonstrates the ZRA’s resolve to enforce accountability and ensure adherence to tax laws.

The case also highlights the utility of the Plea Negotiations Act in facilitating restitution and expediting judicial processes. However, some observers have critiqued the imposed fine as insufficient to serve as a deterrent, given the scale of the revenue lost.

Efforts to bolster revenue collection mechanisms remain a government priority to fund essential public services and national development projects. The Spax Mining Limited case serves as a stark reminder of the need for vigilance, transparency, and accountability across all sectors.

While the recovery of K4.4 million in VAT and the K13,500 fine mark a step toward reclaiming lost revenue, stakeholders have called for additional reforms to close loopholes and strengthen compliance.

This case sends a clear warning to businesses: tax evasion carries serious financial and reputational consequences. Entities engaging in fraudulent practices risk not only hefty penalties but also diminished trust with both the public and the government.