Tanzania: Relief for Artisanal Miners

PRESIDENT John Magufuli's directive to waive taxes imposed on small-scale miners has started paying off after the National Assembly unanimously endorsed a Bill that proposes the removal of withholding tax of 5 per cent.

Attorney General (AG), Prof Adelardus Kilangi, tabled the Written Laws (Miscellaneous Amendments) (No 2) Act, 2019 for the second and third reading, which among other things, proposes to amend the Income Tax (Cap 332), whose section 83B of the First Schedule, is replaced replaced with a view to removing the obligation to withhold tax of 5 per cent payable by small-scale miners.

According to Minister for Minerals Dotto Biteko, the amendments came as an outcome of a meeting between President Magufuli and small-scale miners in Dar es Salaam, last month.

"This is a clear indication that our government is prioritising the voice of its people. That's why the amendments have come in less than a month," he said, when debating the Bill.

During his meeting with miners, businesspeople and other stakeholders at Julius Nyerere Convention Centre (JNCC) in Dar es Salaam on January 22, President Magufuli said it was high time the taxes imposed on the mining sector were removed to encourage miners to pay tax and reduce chances of tax

The Head of State noted that current taxes imposed on miners were "unacceptably high" and would wish to see them revised in Parliament under the certificate of urgency.

This came after a section of miners, under the Federation of Miners Association of Tanzania (Femata) raised their voices against, among other things, an 18-per cent value added tax (VAT) imposed on mineral goods with over 100 million annual turnover.

Femata president John Bina said miners had to shoulder the taxes' burden, including 18 per cent of their annual turnover as VAT, a royalty of six per cent, five per cent withholding tax, inspection and clearance fee of one per cent and service levy (0.3 per cent).

The new law proposes the amendments to the VAT Act to propose the zero-rating supply of precious metals and gemstones by small-scale miners at mineral and gem houses.

Aimed at favouring miners, the new Act is amended to make buying and disposing of minerals in the mineral and gem houses compulsory save for holders of mining licences or special mining licences.

The law further proposes that buying stations be established in mineral areas where there is no mineral and gem houses.

"The amendments are expected to put in place vibrant mechanisms that will enable small-scale miners to sell their minerals, regulate and control trading in minerals with a view to ensuring revenue relating to trading in minerals is efficiently collected," said Prof Kilangi when tabling the Bill.

The new Bill has also proposed amendments in the Local Government Authorities (Rating) Act. In the new amendments, the law has set a flat rate for property tax and enable the Tanzania Revenue Authority (TRA) to be the sole collector of property tax in the country.

"The proposed rates are 10,000/- for ordinary buildings situated in rural and urban areas, 20,000/- for each storey building situated in rural areas and 50,000/- for each storey building situated in urban areas," said the AG.

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