Tanzania: Change in mining taxes put on hold


JF-Expert Member
Feb 11, 2007
Change in mining taxes put on hold

By The Citizen Reporter and Agencies

Tanzania has postponed the introduction of sweeping changes in the country's tax regimes.

The deferment will give more time for mining companies to contemplate on how the reforms will affect them, said MineWeb - a miner's website.

Mining companies operating in the country had expected that the Government would introduce major tax reforms in the mining sector in the financial year 2008/09.

Instead, Finance and Economic Affairs minister Mustafa Mkulo gave them temporary relief when he presented the budget in the National Assembly in Dodoma last week.

''Sweeping changes in the country's tax regimes, including the removal of exemptions from the mining sector, would only be effected on July 1 after passing through Parliament - thereby giving the miners more time to contemplate how such reforms would affect them,'' MineWeb noted yesterday.

''Of urgent note on the minister's agenda, however, was the need to tackle mining companies that escaped paying the country's mandatory 30 per cent corporate tax by continuously declaring losses.''

Mr Mkulo announced that the Government was introducing a 0.3 per cent alternative minimum tax (AMT) of the turnover on companies making losses for three consecutive years.

Analysts have called on the Government to be careful in reforming taxation in the mining industry.

Mr David Tarimo of PricewaterhouseCoopers said the reforms would be hard to administer since they were against some financial laws.

The Government said it would amend the Income Tax Act to reverse a growing tendency in which some companies declared losses annually to avoid paying corporate tax.

Observers say the move is aimed at ensuring that the country earns at least 10 per cent from the total value of the minerals produced annually.

Mining companies operating in Tanzania have been enjoying a wide range of incentives and tax breaks, attracting up to $2.5 billion of investment in the sector since 1998.

Tanzania the third leading gold producer in Africa after Ghana and South Africa.
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