…AG files to push for payment to Malawi Government
Nyala Mines Limited which has been mining rubies from Chmwadzulu in Ntcheu district has been accused of evading tax payment to Malawi Government of more than US$300 billion. Malawi’s Attorney General Thabo Chakaka Nyirenda has since written the United States based Columbia Gem House which owns the local mining company to settle the amount within 30 days or face legal action.
The AG’s letter to the company dated July 26, 2022 disclosed that between 25th August, 2008 and 30th July 2013, Nyala Mines Limited only paid taxes amounting to MK604,413.13 (US$600) yet according to the USA Department of Interior, the company exported 150 kg of ruby and rare Padparadscha and 300 kg of sapphire every year with projected annual revenue of $24 billion from their Malawian operation.
Columbia Gem House has been trading and doing mining activities at Chimwadzulu since 2004 but later fraudulently registered Nyala Mines Limited as its local subsidiary.
According to Chakaka Nyirenda the firm has been evading taxes including duty on sales of rubies and sapphires mined from 2008.
Reads the letter: “Going by Nyala Mines Limited’s own declared minimum price of untreated ruby of US$20,000 per carat, this yields the sum of US$9,000,000,000.00 (Nine Billion US Dollars) worth of sales revenue per year from ruby alone, and another US$15.00,000,000.00 (Fifeen Billion US Dollars) worth of sales revenue per year from sapphire.
“The total net tax revenue that had been evaded by Nyala Mines Limited amounts to US$309, 600, 000, 000.00 (Three Hundred and Nine Billion Six Hundred Million US Dollars).”
Chakaka Nyirenda says in the letter that between 25th August, 2008 and 30th July 2013, Nyala Mines Limited only paid taxes amounting to MK604,413.13 yet according to the USA Department of Interior, Nyala Mines Limited exported 150 kg of ruby and rare Padparadscha and 300 kg of sapphire every year.
The AG further noted that Columbia Gem House declared its record prices for the Malawi ruby and sapphire as having been set at US$425,000 per carat and sapphire at US$48.871 per carat. On the other hand, he says natural untreated ruby from Malawi is sold between US$20,000 and US$25,000 per carat while top grade untreated ruby from Malawi is sold at US$50,000 per carat.
Chakaka Nyirenda further notes that according to a 2014 article, titled Constructing Ethical Mineral Supply Chains in Sub Saharan Africa The Case of Malawian Fair Trade Rubies by Gavin llilson, the first collection of ruby from Chimwadzulu Mine was made available for US retailers in February, 2004.
According to the AG, llilson in the article observes that ‘these stones are of extremely high quality and therefore have considerable market potential.
The AG says even llilson bemoaned the unfair trading that was being practiced by the mine owners.
The AG, acting on behalf of the Malawi Government has since demanded that the company pay $309,600,000,000 in unpaid taxes.
“Nyala Mines Limited and Columbia Gem House breached (the law) when they failed to disclose all income realised from the investment and when they engaged in trade mispricing and improper transfer pricing techniques,” the letter reads.
Nyirenda has warned that Malawi could seek to prosecute Nyala Mines Limited and Columbia Gem House and their officers, along with anyone implicated in tax evasion or export fraud schemes.
“It is Malawi’s position that you dishonestly changed the name of the mining company to Nyala Mines Limited to disguise the origin of the company, that is, so that the new name of the company sounded local to avoid suspicion and detection,” Nyirenda writes.
Adds the AG: “I, therefore, demand from you the payment of the said sum of US$309,600,000,000 plus interest at the commercial lending rate from the date the said taxes and royalties fell due to the date of payment within 30 days,” the letter says.