Zambia paid 8.5bn kwacha ($400m) in VAT rebates to mining companies last year, equivalent to about 3.5 per cent of the country's struggling foreign debt, the head of the country's tax authority said on Wednesday.
Zambia is negotiating with creditors in an attempt to obtain debt relief.
In November, Zambia defaulted on $42.5 million in bonds.
Zambia is Africa's second largest copper producer.
Even before the pandemic, the country's economy was struggling because of the low price of copper, its main export, and the IMF classified it as a debt crisis.
Kingsley Chanda, commissioner of the Zambia Revenue Bureau (ZRA), said at a press conference that VAT rebates to the mining sector accounted for 67 per cent of such rebates and were "in line with our desire to cancel all outstanding rebates".
Goodwell Mateyo, chairman of the Zambia Chamber of Mines, said the government still owed mining companies about $1.6 billion in VAT rebates at the end of 2020.
"It is encouraging that the government is paying VAT refunds, but there is still a backlog of issues (for VAT)."
Mining companies operating in Zambia include Barrick Gold, First Quantum Minerals, Eurasian Resources Group and Glencore.
Glencore is preparing to sell its majority stake in the Mopani mine to Zambia's state-owned mining investment arm.
