By Editor, 25th August 2013
In our yesterday’s edition, we published a lead
story headlined, “As exports clock $7billion Dar gets only $303million
in taxes,” which showed what the country earned especially in corporate
tax during the past four years.
According to the story, major foreign gold
mining companies earned $6.967bn (Sh11.495 trillion) between 2009 and
2012, according to the current exchange rate of Sh1,650 against the US
dollar, but paid the Tanzanian government corporate tax amounting to
only $280million (Sh473.8billion) over that period.
Corporation tax is charged on gross profit
of any company doing business in Tanzania under the current law, under
which the Tanzania Revenue Authority (TRA) takes 30 percent of the
posted profit.
According to data released by the Tanzania
Mineral Auditing Agency (TMAA), Geita Gold Mine was the leading gold
mine, which contributed about Sh299.4bn, followed by Resolute Tanzania
Ltd which paid a handsome Sh97bn. Tulawaka Gold Mine, owned by African
Barrick Gold, came third and paid Sh77.4bn during the same period.
Although African Barrick Gold is the
largest gold producer in the country, its contribution in corporation
tax remains abysmal because the company continues to declare losses at
its North Mara, Bulyanhulu and Buzwagi mines.
Data from the Bank of Tanzania – reliably
obtained by The Guardian on Sunday show that in 2009 Tanzania’s gold
exports rose to $1.076 billion in 2009, up from $932.4 million in 2008
when gold prices per troy ounce reached $972million.
In 2010, the value of gold exports rose by
31 percent, reaching $1.365 billion, thanks to world’s gold prices that
reached $1,112 per troy ounce.
Data from the Tanzania Central Bank
further show that in 2011 gold exports rose by 47 percent, reaching
$2.226bn, when the price per troy ounce also rose to a record $1,568.
In 2012, gold exports rose to $2.300bn as the price per troy ounce surged to $1,700.
Over the same period, production cost per
ounce ranged between $650 and $890 per ounce -- depending on the type of
the mine as well as the ore grade available.
But the gold prices ironically surged,
raising the value of Tanzania’s export earnings but the country’s
corporation tax remained unconvincing.
According to the TMAA, major gold mines
paid fuel levy amounting to $2m, which wasn’t paid up to 2010. These
mines, according to TMAA, also paid withholding tax amounting to $3m
over the past four years, and another $1.5m in government levy.
At the previous rate of 3 percent in
royalties, it means the government has earned a total of $174.17 million
over the past four years in royalties from gold earnings of $6.967
billion.
To put things into perspective, during the past four years, the total taxes paid including royalties, amounted to $461million.
Legally, Tanzania got what it deserves though logically, it still doesn’t make sense at all.
We are aware that Mining industry has
recorded a stable growth during the past decade, creating jobs and much
more support to the country’s economy, but the figures still cast doubt
on whether ‘this is a win-win’ situation or not.
If Tanzania didn’t benefit much when gold
price surged to a record high between 2008 and 2012, then there won’t be
any serious benefit, at least for now, when global gold price has
plunged.
The billion dollar question is how
Tanzania can benefit more in terms of taxes without affecting the
multi-billion gold mining sector, which is heavily dominated by foreign
investors. Hopefully, as we continue to debate this issue thoroughly and
fairly, one day, there will be a lasting solution before all mines
close down their businesses in Tanzania.
SOURCE:
GUARDIAN ON SUNDAY via IPPMEDIA.COM