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Tanzania government must be vigilant to charge abg the capital gains tax

Discussion in 'Biashara, Uchumi na Ujasiriamali' started by Sophist, Aug 22, 2012.

  1. Sophist

    Sophist JF-Expert Member

    Aug 22, 2012
    Joined: Mar 26, 2009
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    Dar esSalaam, Tanzania: Tuesday, August 21[SUP]st[/SUP] 2012 [h=4]Introduction[/h][h=4]Informationreached the Coalition of Publish What You Pay (PWYP) in Tanzania since lastweek is that Barrick Gold (BG) has resolved to sell its 74% stake in the AfricaBarrick Gold (ABG) to the Chinese state owned China National Gold (CNG). Themedia in the United Kingdom (UK) and Tanzania quoted the Barrick Gold and ABGexecutives as confirming to have started negotiations with CNG, which mayculminate in the latter's total acquisition of the former.[/h][h=4] [/h][h=4]Publish What You Pay Tanzania Coalition Position[/h][h=4]Now thatABG prepares to exit the country is something to worry Tanzanians; firstly, itrelates to the Government competence to enforce ABG payment of 20% capitalgains tax. The capital gains tax refers to gains from the disposal of Tanzanianassets by non-residents, which is charged at 20% on the realised net gains.PWYP-Tanzania is reliably informed of Tanzania Government failure to recovercapital gains tax from Placerdome when Barrick Gold bought the goldmines fromthe former. We remind and urge the Government to set the strategy that willensure recovery of 20% capital gains tax and corporate tax arrears from ABGsimultaneous with CNG acquisition of the ABG goldmines.[/h][h=4] [/h][h=4]Secondly,PWYP-Tanzania is worried whether the Government has grasped lessons regardingachieving the goal of free fiscal regime offers to foreign large scale miningcompanies. It is perplexing and inconceivable for the Government to offer freetax incentives to richer multinational corporations, than Tanzania – bankrolling the multinationals tomake profits and later exit at their will without paying significant taxes tothe Government. We remind and urge the Government to immediately change the taxincentive regime offered to foreign mining companies, starting with entry ofthe China National Gold once it acquires the ABG. [/h][h=4] [/h][h=4]TheTanzania PWYP coalition considers tax incentives offered to foreign large scalemining companies unjustifiable. The coalition looks forward to see acompetitively, transparently and accountably transacted ABG/CNG deal.[/h][h=4] [/h][h=4]Background information[/h][h=4]ABG iscross listed at the London and Dar es Salaam Stock Exchange Markets with thetotal value of US$2 billion. Since Initial Public Offer (IPO) launch in March2010, ABG has only operated in Tanzania where it owns and operates four LargeScale Gold Mining (LSGM) projects in the names of Bulyanhulu Gold Mine Limited,North Mara Gold Mine Limited and Pangea Minerals operating Tulawaka and Buzwagigoldmine projects. Barrick Gold bought Bulyanhulu Gold Mine and North Mara GoldMine from Placerdome of Vancouver Canada 8 years ago. Barrick Gold is also aCanadian Company. All ABG goldmine projects are in the Lake Victoria zone; theregions of Shinyanga, Kagera and Mara.[/h][h=4] [/h][h=4]TheTanzania Extractive Industries Transparency Initiative (TEITI) reportspublished in 2011 and 2012 expose ABG's tax payment history. The reports showABG does not pay the 30% corporate tax obligation to the Government. Astatement quoting ABG Chief Executive Officer, Mr Greg Hawkins, end of March2011 indicated ABG’s net profit rose 237 per cent during 2010 to US$222.6million (over 330bn/-) from US$66 million in the previous year – meaning Tanzania would havereceived US$ 66.78million had ABG paid its 30% corporate tax obligation. ABG has benefited fromthe foreign investment incentive package – the free fiscal regime awardedto foreign mining companies.[/h][h=4] [/h][h=4] [/h] AboutTanzania Publish What You Pay Coalition The Tanzania Publish What You Pay Coalition is part of the global networkof civil society organizations that are united in their call for oil, gas andmining revenues to form the basis for development and improve the lives ofordinary citizens in resource-rich countries. Since it was launched PWYPmaintained mass mobilization of civil society organizations to campaigncollectively at international, regional, national and local levels for greatertransparency in the extractive industries. Since 2002 when it was launched by agroup of 6 London-based NGOs, PWYP has evolved into a global network of over630 civil society organizations, large and small, in 59 countries in Africa,Asia, North and South America, Europe and Australia. National coalitionsestablished in 38 countries, with 23 in Africa, are actively campaigning forextractive industries revenue transparency.
    allAfrica.com: Tanzania: Activists Want Barrick Taxed On Gains