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TRA still waiting on Alstom's billions

Discussion in 'Habari na Hoja mchanganyiko' started by BAK, Dec 7, 2008.

  1. BAK

    BAK JF-Expert Member

    Dec 7, 2008
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    TRA still waiting on Alstom's billions

    2008-12-07 11:45:59
    By Polycarp Machira

    In the three months since the Tanzania Revenue Authority (TRA) seized property and bank accounts belonging to Alstom Power Rentals Limited LLC, no breakthrough has been reached in recovering the staggering 14bn/- in back taxes.

    Early this year, a whistleblower revealed the American energy company had evaded taxes for its operations in Mwanza city, prompting the TRA to seize the company`s assets - Electricity Power Generating Plant - under a walking possession agreement, in which the assets are not removed from the debtor�s property but are legally signed over to the debt collector, in this case the TRA.

    Speaking to The Guardian on Sunday this week, the Director for Taxpayer Services and Education Protas Mmanda, said the issue has not been resolved but that talks with Alstom are continuing. He declined to comment further on the matter.

    In August the TRA seized properties and bank accounts belonging to the company, which had been contracted to supply the Lake Zone with 40 megawatts of electricity.

    Under the agreement, none of the parties involved, has the right to dispose of the property in any manner until the case is fully finalised or settled.

    ``The company gave its reasons for failing to pay the tax, though they are personally and ethically wrong to be disclosed to any third party,`` Mmanda said in September.

    ``TRA saw the validity of the reasons and accepted to amicably settle the issue through a dialogue as was requested by Alstom.``

    He said that the TRA later decided to leave the property in walking possession - wherein Alstom will resume ownership of the property upon payment of the tax arrears - because he said if the government took the property outright, they stood less chances of recouping the money owed by the company, which was already planning on leaving the country.

    Still, now three months after the walking possession agreement was made, talks are still ongoing and the government is still out 14bn/-.

    According to TRA insiders, Alstom had not paid VAT, corporate and other taxes throughout its contract period, which began early last year and ended on August 1.

    The controversial contract, which caused great public outcry that spurred parliament to form a special committee to investigate it, ended after Tanesco terminated its emergency power generating deals with Alstom and Dowans Company Ltd.

    According to well-placed sources within the TRA, after months of trying in vain to recover the outstanding billions of shillings, the revenue authority decided to seize Alstom�s properties and bank account.

    However, Mmanda told The Guardian on Sunday that the authority realised the company had outstanding taxes after it had conducted a routine assessment exercise.

    He said in situations where any non-resident with business undertakings in Tanzania is about to leave the country, the commissioner may issue a jeopardy assessment and collect the relevant tax accordingly as provided for by the Income Tax Act 2004.

    According to the director, in this case assessment is issued after the company has closed down business and will most likely leave the country.

    ``The tax laws provide for tax recovery measures including property confiscation, attachment of properties and use of collection agents or issuance of agency notices for purposes of rescuing government revenue when it is necessary,`` he added.

    Alstom is alleged to have taken advantage of the loophole within the TRA system to evade taxes, until senior Tanesco staff discovered the anomaly in March.

    The TRA Regional Manager in Mwanza, Jeremiah Lussana, confirmed that Alstom Power Rentals LLC had not paid any tax until the authority intervened in March and ordered that the money be paid. The directive was ignored.

    ``It was an oversight on our side,`` he said, explaining that the regional office had assumed the company was paying all taxes to the TRA headquarters in Dar es Salaam, and those at the headquarters had thought the opposite.

    The confusion was blamed on the secrecy surrounding the contract.

    Nevertheless, when asked to confirm the amount involved, Mmanda said he was barred by law from disclosing the outstanding money owed by the US company.

    ``I`m not ready to disclose the amount in question because it is unethical to do so,`` Mmanda said.

    Like the controversy-ridden Richmond, Alstom was contracted by Tanesco last year to produce 40MW of emergency electricity, but produced nothing during the entire period.

    The company continued to be paid billions of shillings every month as capacity charges until the government decided to terminate the contract.

    SOURCE: Sunday Observer