K2bn tax bill delays Ilomba Mine reopening

Malawi Revenue Authority (MRA) is demanding about K2 billion in tax liabilities before any activities at Ilomba Granite Mine in Chitipa District can start.

This follows MRA Tax Investigations Division’s probe which established that the firm allegedly evaded tax after selling the mine in 2019.

However, the mining firm wrote MRA commissioner general John Biziwick to protest the bill.

But in a letter dated September 2 2022, Biziwick dismissed the appeal. He said the company did not pay tax gains amounting to K2 072 375 791.69 and imposed a deadline of September 16 2022.

Reads the response in part: “I would like to remind you that capital gains tax is payable on capital gains from the disposal of a business asset. Your appeal has been dismissed in its entirety.”

Ilomba Granite Company Limited founder Faisal Hassen said they submitted evidence to MRA to prove that the company has not been sold.

“We did not have a valid mining licence to dispose of the mine. That’s why we feel the tax collector is acting otherwise,” he said.

He said the Ministry of Mines only renewed the licence on October 14 2022 after the High Court of Malawi ruled in their favour.

Hassen said they can cannot carry out mining activities or move any minerals from the mine due to the tax bill and an embargo which MRA has placed on them.

“The embargo does not only concern the sodalite stones, but also our quarry is completely closed and secured by armed police. We cannot enter the quarry nor remove anything from it,” Hassen said.

He said they will be taking the matter to court.

The company’s lawyer, Kalekeni Kaphale in a memo we have seen, confirms the decision to take the matter to the High Court Commercial Division for arbitration.

Natural Resources Justice Network chairperson Kosam Munthali said events surrounding Ilomba Granite Mine only show how far the country is lagging behind on mining governance.

Recently, the Anti Corruption Bureau arrested two top officials from the Ministry of Mines, director of energy Cassius Chiwambo and principal mining engineer Gibson Nyirenda for allegedly demanding bribes to facilitate licence renewal of the Ilomba Granite Company Limited.