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Dar gets Sh315.4bn taxes in three years as gold exports reach Sh7.2 trillion

26th February 2012
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Gold processing plant at Bulyanhulu Mine in Kahama town: gold exports during the past three years surged to Sh7.2 trillion.

Seven foreign companies which mine gold and diamonds in the country paid the government a total of Sh315.2 billion ($196.65 million) during the past three years.

A statement by the Tanzania Minerals Auditing Agency (TMAA) given to the Tanzania Editors Forum last Saturday in Tanga said the amount was an accumulation of various taxes like withholding tax, value added tax, Pay As You Earn, corporation tax and the skills development levy.

However during the past three years, the total value of gold alone produced and exported reached 4.55bn (Tsh7.2trillion).

Total gold exports during the past three years (2009-2011) were equivalent to 50 percent of the total national budget for 2011/12.

Despite the surge in gold exports buoyed by skyrocketing prices in the world market, Tanzania didn’t benefit from the boom because most mines still claim to be posting losses.

The Tanzania Minerals Auditing Agency (TMAA) also saved the taxman in collecting a total of Sh75.3 billion during the past three years.

The move came after TMAA thoroughly audited production and exports of gold, diamond and tanzanite whereby it detected massive cheating as some companies tried to ‘cook books’ of accounts.

According to details released by TMAA to the forum the amount recovered was largely tied to income tax.

In overall rating, Bulyanhulu Gold mine Limited paid $ 42.78 million, followed by Resolute Tanzania Limited Limited which paid $39.62 million.

Other companies and the amounts paid in brackets are Pangea Minerals Limited paying $35.15 million, North Mara Gold Mine Limited ($29.93 million), Geita Gold Mine Limited ($ 25.69), Williamson Diamonds Limited ($11.04 million) and Tanzanite One Mining Limited ($ 2.44 million).

This reflects recent estimates by the BoT Monthly Economic Review for November 2011, which noted that the value of gold exports increased from $ 1.496 billion in 2010 to $2.096 billion.

But while gold exports fetchedbillions of dollars during that period, the Tanzanian shilling tumbled against major international currencies, mainly the US dollar.

Further, the report notes that royalty payments reconciliation has facilitated the royalty payment of US $ 912,000 from the mine firms, asserting that this success is solely due to reconciliation work done by the agency.

However the report contradicts the ongoing public outcry that the country does not benefit enough from the sector. The outcry is particularly engendered by the fact that despite its huge share of exports the sector contributes only about 2.8 per cent to the economy (GDP), although the government wishes to expand this to 10 per cent by 2025.

Late last year for instance, the chairman of the Tanzania Extractive Industry Transparency Initiative (TEITI) committee, Judge Paul Bomani declared that malpractices were prevalent in the mining industry in royalty payments to the government.

He said that in the 2008/2009 fiscal year, the mining companies paid a total Sh174.9bn/- in royalty, but it was revealed later that only Sh128.4bn/- was collected by the taxman. Judge Bomani who chaired the presidential mining policy review committee to provide ideas on rectifying mining sector legislation and contracts in 2008 further urged the Controller and Auditor General (CAG) to investigate the whereabouts of the missing 46.5bn/-.

Judge Bomani was presenting a report during a workshop on dissemination of findings of the first TEITI reconciliation report on payments and revenue from extractive industries. He said in their findings they realized that the government was losing a lot of money from mining companies.

“Unlike in previous years where the government depended on data from the mining firms, currently the government has been receiving information regarding production and mining business at large from the agency, auditing all big mines and some small and medium size mining firms,” the report noted.

The TMAA report also point that an audit held between 2007 and 2008 by the agency helped to eliminate gold-hedge losses of up to $ 75.3 million.

TMAA is a semi-autonomous institution established under the Executive Agencies Act, Cap. 245. The agency took over functions previously undertaken by the Minerals Auditing Section under the Ministry of Energy and Minerals. It was given increased scope to cover large, medium and small scale mines for all minerals produced so as to maximize benefits from the mining industry to enhance socio-economic development.

SOURCE: GUARDIAN ON SUNDAY
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