Financial Services Association, April 10 (Reporters Zeng Chuchu and Liu Yue) After 20 years of investigation, Golmud Zangge Potash Co., Ltd., a subsidiary of Zangge Mining (000408.SZ), revealed another tax issue. This time, it is expected to directly affect the listed company's profit and loss of 214 million yuan.

Zangge Mining announced tonight that the wholly-owned subsidiary Zangge Potash received a “Notice on Tax Matters” (hereinafter referred to as the “Notice”). The notice states that Zangge Potash and Golmud Zangge Lithium Co., Ltd. (hereinafter referred to as “Zangge Lithium”), a wholly-owned subsidiary of the company, are related enterprises. From 2021 to 2023, Zangge Potash will sell brine to Zangge Lithium. Compared with the brine sales prices of other taxpayers in the region, the sales price of Zangge Potash is significantly lower. According to the relevant provisions of the tax law, Tibetan potash fertilizer shall pay back related taxes such as value-added tax and resource tax.

According to preliminary estimates, Tibetan potash fertilizer will need to pay a total of 480 million yuan in related taxes and late fees from 2021 to 2023. After Zangge Potash pays back taxes on the sale of brine to Zangge Lithium, Zangge Lithium will generate value-added tax withholding tax rebates of about 123 million yuan and corporate income tax refunds of about 142 million yuan, for a total of 265 million yuan in tax refunds. After the supplementary tax payment of Tibetan potash fertilizer and the corporate income tax refund from the Zangge Lithium industry, it is estimated that it will affect the company's profit and loss of about 214 million yuan in 2024.

According to the 2023 report of Zangge Mining, the company's two main products, potassium chloride and lithium carbonate, accounted for 61.53% and 37.89% of revenue in 2023, respectively. The main business of Zangge Potash Fertilizer is the production and sale of potassium chloride, and the main business of Zangge Lithium is the production and sale of battery-grade lithium carbonate.

It is worth noting that this is not the first time that Tibetan potash fertilizer has been subject to tax inspection. According to the Zangge Mining announcement, on March 8 of this year, Zangge Potash received a tax processing decision from the Qinghai Provincial Taxation Bureau. It is required to make up the underpaid value-added tax, urban maintenance and construction tax, corporate income tax, education fee surcharges, local education surcharges, and the price adjustment fund that was underpaid from 2011 to 2014. In total, they paid back about 56 million yuan in various taxes and 132 million yuan in late payment fees, totaling about 188 million yuan.

However, in the tax inspection 20 years ago, late payments far exceeded tax payments. Zangge Mining said that according to the promises made by the parties involved in the restructuring regarding Zangge potash fertilizer or issues in the “Notice of the Parties Related to Major Asset Restructurings” at the time of the company's listing, inspection tax supplements and late payment fees were ultimately handled by Tibet Zangge Venture Capital Group Co., Ltd. and Xiao Yongming Compensation Company. As of the 2023 annual report, the above taxes and late fees have not been paid.

In an institutional research activity on March 25, Zangge Mining once again responded that non-operating expenses in 2023 mainly include inspection tax compensation and late payment fees, non-current asset scrapping losses, and external donations. Among them, inspection tax compensation and late fees are matters before restructuring and listing.

According to data, in the second half of 2016, Zangge Mining completed a major asset restructuring. Currently, its main business is mining mineral resources (non-coal mines). The main products are potassium chloride and lithium carbonate. In 2023, the company achieved net profit of 3.42 billion yuan attributable to shareholders of listed companies.