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Tanzania Will Levy Capital Gains Tax on Proposed Barrick Sale

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by BAK, Aug 30, 2012.

  1. BAK

    BAK JF-Expert Member

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    Tanzania Will Levy Capital Gains Tax on Proposed Barrick Sale

    By David Malingha Doya - Aug 29, 2012 5:01 PM ET

    Tanzania's revenue authority said it will require Barrick Gold Corp. (ABX) to pay a 20 percent tax on any capital gain resulting from its proposed sale of African Barrick Gold Plc (ABG) to China National Gold Group Corp.

    Barrick, the world's biggest producer of the metal, said Aug. 16 it's in talks with the state-owned Chinese company about its 73.9 percent stake in African Barrick, the largest gold miner in Tanzania. U.K. takeover and merger regulations restrict London-listed Barrick from making any comment, Andy Lloyd, the company's spokesman, said in an e-mailed response to questions yesterday.

    "As the tax authority, we are keenly following the developments," Harry Kitilya, commissioner general of the Tanzania Revenue Authority, said in an interview on Aug. 23 in Dar es Salaam, the country's commercial capital. "At an appropriate time, we shall require African Barrick to submit all the details of the transaction to determine the amount of capital gains to be paid."

    Tanzanian lawmakers on Aug. 23 amended the country's Income Tax Act to include the sale of shares and securities among items on which a capital gains tax can be imposed. Previously, the tax was levied on land and buildings at a rate of 10 percent for residents and 20 percent for non-residents.

    The amendment was made "with a view of widening the tax base by including in tax net gains on sale of shares or securities held in a resident entity to counteract the current tax avoidance practice of selling local companies through overseas holding companies," according to the Finance Act 2012, signed by Finance Minister William Mgimwa on June 13.

    African Barrick, whose shares trade on the Dar es SalaamStock Exchange, has its primary listing on the London Stock Exchange. Barrick, its parent company, is based in Toronto.
    Court Case

    The East African nation's government is currently in court seeking $196 million in capital gains tax following Moscow-based ARMZ Uranium Holding Co.'s acquisition last year of Perth, Australia-based Mantra Resources Ltd., whose Tanzanian unit owns the Mkuju River uranium project. The tax was imposed based on the fact that the mine is based on land in Tanzania, according to the revenue authority.

    Tanzania, which vies with Mali to be Africa's third-biggest producer of gold, after South Africa and Ghana, is seeking to benefit more from its resources. Mines Minister Sospeter Muhongo has urged companies to target breaking even in at most five years and then start paying tax.
    Lloyd referred a question about why Barrick may withdraw from Tanzania to the company's Aug. 16 statement.
    ‘Maximizing Returns'

    "Barrick has adopted a renewed focus on maximizingshareholder value through a disciplined capital allocation program which includes optimizing Barrick's portfolio of assets and maximizing returns on investment and free cash flow," the company said. "The preliminary discussions relating to ABG form part of this program."

    Ally Samaje, the acting mines commissioner in the Mines Ministry, said the government's consent for any takeover by China National would hinge on whether the tax is paid.

    "The discussions are still at a preliminary stage, but we shall ensure that government interests are protected, and that government gets what it is supposed to get from the deal," he said by phone from Dar es Salaam today. "The good thing is that the law has now been amended to clearly state shares too."

    Tanzania's registrar of titles or companies will only allow a transfer upon notice of payment of the tax, or that no tax is to be paid, according to the Income Act.

    African Barrick has paid taxes and royalties of 256 billion Tanzanian shillings ($163 million) from its Bulyanhulu mine between 1998 and 2011, according to information from the Mines Ministry. The company has paid 18 billion shillings from Buzwagi, 125.6 billion shillings from North Mara and 105 billion shillings from Tulawaka over the same period, the information shows.
     
  2. BAK

    BAK JF-Expert Member

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    ....Hehehehe kumbe njemba huwa zinashuka hapa kuchukua mawazo yenye maslahi na nchi yetu....wiki moja baada ya kupendekeza TRA wawe macho ili nchi isilizwe tena na Barrick kama tulivyolizwa na Airtel waliponunua Zain Africa sheria za kodi kuhusiana na faida itokanayo mauzo ya hisa zikabadilishwa.

    Bofya hapa: http://www.jamiiforums.com/jukwaa-la-siasa/308503-barrick-gold-kuuzwa.html
     
  3. King'asti

    King'asti JF-Expert Member

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    Safi sana! Shame on Mantra and its associates! Walau something is being done now!
     
  4. N

    Ndinani JF-Expert Member

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    These business people are crooks, they will not reveal to you the correct amount of the transaction; if anything they will tell you that they have sold the entity at a loss!! Sasa hapo hiyo kodi utaitoa wapi?
     
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