Dismiss Notice
You are browsing this site as a guest. It takes 2 minutes to CREATE AN ACCOUNT and less than 1 minute to LOGIN

Minister slams mining firms on account book

Discussion in 'Habari na Hoja mchanganyiko' started by BAK, May 3, 2008.

  1. BAK

    BAK JF-Expert Member

    #1
    May 3, 2008
    Joined: Feb 11, 2007
    Messages: 50,074
    Likes Received: 9,780
    Trophy Points: 280
    Minister slams mining firms on account book

    By The Citizen Reporter
    THE CITIZEN

    Mining companies could be cheating the Government by keeping separate account books, those that declare losses which they publicise locally and those that declare profits that they use abroad to attract investors in stock exchanges.

    Finance and Economic Affairs minister Mustafa Mkulo told reporters in Dar es Salaam yesterday at the occasion of the 10th anniversary of the Dar es Salaam Stock Exchange (DSE) that the mining companies were declare losses locally.

    It has thus been difficult to get them listed at the DSE, he stated. The fact that the parent companies of these mining companies are listed on stock markets abroad means their subsidiaries including the mining companies here make profits.

    If these mining companies with activities in the country have been making losses they would not be tolerated by their parent companies, he affirmed.

    Mkulo said it seems that mining companies in the country keep two kinds of account books, the ones that declare losses that they show to authorities here and the ones that declare profits that they show to their parent companies. However the accused firms could not be reached yesterday to respond to the claims by the minister.

    Mr Mkulo was raising a pertinent question that had been addressed by Alex Stewart, the auditing firm that pointed out loopholes through which mining companies understate their income.

    Despite paying the auditors handsomely, the Government never acted on its report while several mining companies have strongly rejected claims they were understating income accruing from gold mining activities.

    Yesterday the minister said the challenge facing DSE is to get more companies enlisted at the stock market including the major mining companies.

    Mr Mkulo was responding to a question asked by reporters who wanted to know what the government was doing to get more companies, and especially foreign investors in the country, listed at the DSE.

    The DSE should ensure big investments such as mining companies are enlisted at the stock market, he urged.

    Mr Mkulo's comments add to the public outcry that mining companies cheat the government through declaring losses, thus paying peanuts to the government from their declared taxable income.

    Due to the capital-intensive nature of the mining industry, the various mining companies are exempted to pay some taxes until they recover their losses and start making profits. They are also exempted from import duty on oil and capital equipment imported for their stated activities.

    Tanzania Revenue Authority commissioner-general Harry Kitillya said the was quoted early this year as saying that following the general weaknesses in mining tax management and possibly deliberate under-declaration of financial results by mining companies to pay reduced or no taxes, the Government lost about $207 million in 2007 alone.

    After the public raised outcry, the Government of President Benjamin Mkapa controversially contracted Alex Stewart Assayers Limited to assess and report on whether the government is being cheated by the major mining companies.

    The report was submitted to the government last year but it has not been made public. The Government itself was accused of paying too much to the assayers. It paid about $50 million for the three years that it conducted its work.

    President Jakaya Kikwete in November 2007 named an 11-member committee to review mining sector contracts signed with foreign investors, after intense accusations from civil organisations.

    They say that most mining contracts are tailor-made to suit investors rather than local people, despite that they are the owners of the mineral resource. The committee was expected to present its report to the president in February

    The Public Accounts Committee of the National Assembly said in its report in 2005 that mining companies had declared losses of up to $1.045 billion, indicating that the Government does not have the capacity to ensure mining companies do not cheat the government. Tanzania is Africa's third largest producer of gold.

    It is touted as having a conducive mining environment that has seen mining firms pump into the country $2 billion in the past decade, according to the Tanzania Chamber of Minerals and Energy.

    However, the companies have only paid a total of $255, 526,893 in taxes over the past 10 years.
     
Loading...