Transcript RIVER FLOOD-PLAINS: OPPORTUNITIES, CHALLENGES AND

TAX INCENTIVES IN TANZANIA’S MINING
SECTOR
20.07.2015
NGOWI, HONEST PROSPER SENIOR LECTURER IN
ECONOMICS MZUMBE UNIVERSITY, DAR ES SALAAM
CAMPUS COLLEGE
[email protected];
+255 754 653 740
P. O. BOX 20266 DAR ES SALAAM, TANZANIA
20.07.2015
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BASIS OF THE PAPER: 1 BILLION $
QUESTION REPORT
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LEGAL FRAMEWORK FOR TAX EXEMPTION IN TANZANIA
 SECTION 17 OF 1997 INVESTMENT ACT
 2010 MINING ACT: ONLY FOR NEW MINING PROJECTS
 PRE-2010 MINING INVESTORS HAVE INDIVIDUAL
(SECRET) AGREEMENTS WITH THE GOVERNMENT
INCENTIVES OPEN TO MINING SECTOR
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HOLDERS OF TIC CERTIFICATE OF INCENTIVES
 IMPORT DUTY EXEMPTION ON CAPITAL GOODS
 0% VAT ON IMPORTS
 CARRY OVER LOSSES FOR 5 YEARS AGAINST FUTURE PROFIT
EXEMPTIONS FOR INVESTORS IN SEZs & EPZs
 CORPORATE INCOME TAX FOR 1ST 10 YEARS
 WHT ON RENT, DIVIDENDS & INTEREST RATE FOR 1ST 10 YRS
 VAT ON UTILITIES ; ALL LGAs TAXES FOR 1ST 10 YEARS
 UNLIMITED REPATRIATION OF PROFIT
 INDIVIDUAL FISCAL AGREEMENT WITH GOVT
SPECIFIC TAX INCENTIVES FOR MINING
SECTOR
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ZERO IMPORT DUTY ON FUEL (STD IS TSHS 2000 PER LITRE)
ZERO IMPORT DUTY ON EQUIPMENT UP TO END OF 1ST YEAR OF
OPERATION, THEN PAY 5%
NO CAPITAL GAIN TAX (OTHER SECTORS PAY)
NO VAT ON LOCAL SUPPLIES AND THEIR SUBCONTRACTORS
REDUCED STAMP DUTY AT 0.3%; NORMAL RATE IS 4%
MAX PAY OF LGAs TAXES UP TO $200,000 P.A … LOWER THAN
0.3% OF TUROVER REQUIRED BY LAW
GOVT REVENUE LOST IN MINING SECTOR IN
SELECTED YEARS: EROSION OF TAX BASE
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INCENTIVES/EXEMPTIONS: TSHS 72.6B P.A
ONLY SMALLEST COY WAS AMONG 15 MAJOR TAX PAYERS IN 2011
TMAA AUDIT QUERIES: UP TO $176M P.A ALLEGED OVERCLAIMS
FUEL LEVY EXEMPTION: TSHS 39.8B (2006/7); TSHS 58B IN 2007/08;
COYS CLAIMED $274M IN 2011
IMF: NO MATERIAL TAX PAID IN MINING SECTOR
GOLD XPORT: FROM $500M TO $1.5B, BUT GOVT REVENUE
CONSTANT AT $ 100M P.A
BREAKDOWN OF TAXES PAID BY LARGE
SCALE MINING COYS IN 2008
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65.4% IS PAYE: PAID BY EMPLOYEES NOT COYS
11.2% IS SDL
8.3% IS WITHHOLDING TAX
6.0% (ONLY) IS CORPORATE/INCOME TAX
5.9% IS VAT
3.1% IS ‘OTHER TAXES’
... SEE THE PIE
SOURCE: TMAA, ANNUAL REPORT 2010, P.31
EMERGING ISSUES
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1997 INVESTMENT ACT TOO OLD (15 YEARS)
ARE ALL INCENTIVES NECESSARY?
TOO GENEROUS INCENTIVES IN TANZANIA
REASONS FOR INCENTIVES INVALID THEN AND NOW
CONDITIONAL INCENCTIVE: EMPLOYMENT; TECHTRANSFER; INTERLINKAGE WITH LOCAL ECONOMY
LOST IN MINING, CAN TZ WIN IN GAS AND OIL?
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MANGE TAKK