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Tanzania demands corporate tax from mining companies

Reuters

DODOMA — Tanzania, Africa’s fourth largest gold producer, has told mining companies operating for more than five years to start paying a corporate tax of 30%, citing rising prices of precious metals at the world market.
Tanzania’s gold export earnings rose 31% last year to US$1 879 billion from US$1 436 billion a year before on higher world prices for the commodity, Sospeter Muhongo, energy and minerals minister, said.

 
The minister said the government wanted to earn higher revenues from mining companies due to the rising gold price and added the government had ordered audits of all large-scale gold mines in the country to ensure they started paying corporate taxes after recovering their costs of production.

 
“I am instructing all mining companies that have been in operation for more than five years to start paying corporate tax without any excuses,” he said.
“If they claim they are still making losses and can’t contribute to the national economy through taxes, they should shut down their mines and leave because minerals do not rot.”

 
Major gold mining companies in Tanzania include African Barrick Gold Plc, which has four gold-producing mines, AngloGold Ashanti Ltd and Resolute Mining Ltd.

 
He did not say which of these mines were affected, but said Geita Gold Mine, owned by Anglo Gold Ashanti and the Golden Pride mine, owned by Resolute, had already paid a total of 228,5 billion shillings in corporate taxes.

 
He said Tanzania was also evaluating 11 bids from investors for a stake in the state-run Buhemba gold mine. The government regained ownership of the mine this year after reversing its 2005 privatisation to a local company amid allegations of graft in the previous sale of the mine.

 
It is much smaller than mines run by the big companies.

 
The country has also invited bids for a joint venture project to develop a state-run coal mine with 35,5 million tonnes of reserves, the country’s energy and minerals minister said.

 
The government said the project would also involve construction of a 200MW coal-fired power plant at a cost of US$400 million.

 
“By June 2012, the State Mining Corp received bids from 16 foreign and local companies to enter into joint venture to develop this project,” Muhongo said.

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