The government of Lilongwe is claiming 309.6 billion dollars from the American mining company Columbia Gem House, which he accuses of having set up a fraudulent scheme to avoid paying taxes and royalties on precious stones extracted from Malawi and exported to United States.
This tax reminder, a world record, is, all countries combined, the largest tax adjustment in all history. The amount corresponds to 100 times the budget of Malawi.
In a letter addressed to the mining group Columbia Gem House, the Minister of Justice, Thabo Chakaka Nyirenda, accuses the Malawian subsidiary of this multinational (Nyala Mines Limited), of having evaded customs duties and other royalties on sales rubies and sapphires mined from its mine in Malawi since 2008. In a statement to AFP, the minister says the company only paid $600 (yes, six hundred dollars) in taxes out of the $24 billion dollars of revenue from mining in Malawi. Following a tax audit, the government Malawi requires the company to pay $309.6 billion in taxes plus interest and penalties from the date such taxes and fees became due.
Columbia Gem House and its subsidiary, “have violated their tax obligations and the law in Malawi when they failed to disclose all income earned from the investment and when they engaged in erroneous business practices and improper transfer pricing techniques in the part of the exploration of rubies and sapphires”, accuses the Minister of Justice of Malawi quoted by AFP.
According to him, the scheme which the two companies allegedly used to “to get rich unjustly” is the “changing the name of the company to Nyala Mines Limited to hide the origin of the company, i.e. to make the new name of the company sound local, in order to avoid suspicion and detection”.
The government has further advised that Malawi reserves the right to take criminal action once morest these companies and anyone involved in tax evasion and fraudulent export invoicing. The big audit firms are already shaking.