28 January 2019

Tanzania Miners Petition Government to Reduce Taxes

Photo: Africa Finance Corporation
Mining Operations

Mining companies and experts have urged the Tanzanian government to review taxes downwards in order to reduce cases of tax evasion.

"We urge the government to remove the 18 per cent value added tax to ease a heavy burden that miners shoulder," said John Bina, president of the Federation of Miners Association of Tanzania when the lobby presented a petition to Vice President Samia Suluhu Hassan in Dar es Salaam.

Miners Instead called on the government to increase the service levy from 0.3 per cent to at least 1 per cent.

"To compensate and improve our surrounding communities, we are proposing that the the government adds 0.7 per cent to compensate the reduced taxes," added Mr Bina.

The lobby also told the government to lift its export ban of concentrates.

The government charges 18 VAT, 6 per cent withholding tax, 7.3 per cent inspection fee and service levy of 0.3 per cent on minerals.

"There is also a Tsh60,000 ($25.89) tariff charged by councils for some minerals, among them sand and dimension stones," said Mr Bina.

The mining stakeholders also proposed that the government remove tariffs on imported minerals.

"It is better to have low taxes that will be collected effectively than imposing high taxes that do not facilitate revenue collection or do away with the smuggling and tax evasion that cripple the industry," he added.

The proposals come in the wake of a two-day meeting that Ministry of Minerals officials held with President John Magufuli, during which the head of state called for strategies that would enable the government to earn more more from the mining sector.

Tanzania is home to a number of minerals such as gold, iron ore, nickel, copper, cobalt and silver.

Other minerals are diamond, tanzanite, ruby, garnet, limestone, soda ash, gypsum, salt, phosphate, gravel, sand, dimension stones and graphite, gas, coal and uranium.

There are over six million investors in the mining business.

"All these could contribute through taxes to the country's economy if they were to operate in friendly environment," he noted.

Experts urged that on top of recommendations given, close monitoring the value of mineral exports and mining companies expenditure by the government is also important

"Government should consider having access to the facilities and technical expertise necessary to value minerals, delineating clearly roles and responsibilities and establishing strong inter-agency coordination mechanisms, such as TRA, Ministry of Minerals and all other groups involved in the industry,"

2016/17 Controller and Auditor General (CAG) report suggested for TRA to install software to analyze price, quality or quantity of goods and services to avoid malpractices within the mining industry.

Recent report shows the majority of minerals produced in the East African country are exported for further processing.

In 2017, the whole of East African exported minerals worth $974.6 m which accounted for 9.2 percent decrease, reflecting a large decrease in Tanzania's exports.

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