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DRC losing billions in unpaid taxes
October 5, 2017, 5:11 pm
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Africa, which for centuries witnessed the exploitation of its human and natural resources by Western colonial rulers, is now increasingly being ravaged by autocratic rulers and corrupt politicians conniving with multi-national corporations.

In addition to these loses, the Democratic Republic of Congo (DRC), which tops the list of countries whose natural resources are plundered, faces yet another loss in the form of unpaid taxes. The country is estimated to lose up to $1.3 billion in revenue each year due to the failure to remit taxes by public bodies, tax agencies and state mining firms, as well as from the pillage of revenue through suspicious transactions.

Investigations by London-based lobby Global Witness have found more than $750 million of DRC's revenue earned from mining went missing between 2013 and 2015, even as the country’s administration struggled to provide public services to citizens.

Global Witness said the state-owned mining company, Gécamines, and tax agencies held back from the Congolese national Treasury $149 million in 2013, $314 million in 2014 and $291 million in 2015.

Though it is a public entity, the financial dealings of Gécamines are not available to the public as it does not publish any audited accounts, income, expenditure, debt repayments or whether any profit is paid to the state as the sole shareholder.

DRC is wracked by political violence and unrest. A key cause of discontent with President Joseph Kabila's regime is the chronic lack of funding of basic public services, even as corruption and mismanagement of revenue agencies and Gécamines deplete over a fifth of proceeds from the national exchequer.

DRC is one of biggest and resource-rich countries in Africa; it is also among the poorest. DRC's minerals such as gold and cobalt attract huge investments from foreign firms; the country is Africa's biggest copper producer and also produces 60 percent of the world's cobalt. It is also a country where over 77 percent of the population lives on less than $2 a day.

Up to $10 billion worth of copper and cobalt are believed to be extracted and exported each year from the DRC, yet only 6 percent of this revenue is reaching the national budget.
An obscure law allows agencies to keep part of fines levied leading to fabricated fines in an effort to increase funds that are kept.Tax agencies annually fail to remit revenues of over $50 million to treasury.

At its peak in the 1980s, Gécamines contributed 43 percent of DRC's budget revenue, with an annual output of about 500,000 tonnes of copper. It collapsed in the 1990s after decades of looting. In 2010, DRC transformed Gécamines to a commercial operation owned by the state.

An analysis of data from the Norway-based, Extractive Industries Transparency Initiative — the global standard for the good governance of oil, gas and mineral resources — points to the need for transparency and accountability from the mining sector to tax agencies if the DRC is to avoid sliding into further conflict and chaos.

Zimbabwe, Mauritania, Nigeria, Equatorial Guinea, Sudan and Eritrea have also featured in the complex corruption web in the production and sale of commercial crude oil, natural gas and minerals, accounting for trillions of dollars in revenue loss for the continent.
 

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